Early Settlement vs Full and Final Settlement

Thrifty_Pixie

Hi all,

I think I have the right place for this query, but please advise me if not.

I have had a loan with Northern Rock since the beginning of 2006, and am due to make my final payment on it at the beginning of 2011. I have a fixed rate (which was, I think, 5.9%) and therefore a set amount that I pay each month. All the interest was added onto the front of the loan, which took it from £12k to around £14k to begin with. I have never defaulted on a payment, and my initial plan was to just carry on paying it until it was cleared.

So far so good.

However at the beginning of last year I thought I might be coming into some money, and someone told me that I could ask for a settlement figure to pay it off, which I did. The figure they gave me was around £1000 less than my outstanding balance, which I presume they came to by subtracting all the interest I would not be paying due to clearing the loan 3 years early (there are no early settlement fees with my loan either).

Am I right so far? The settlement fee is reached by interest not accrued?

Now on here I hear of 'Full and Final Settlements' which can be as low as 30% of the outstanding debt, and am wondering whether these are only for defaulted debts? I know that these F&F's go on your credit report, so am assuming so. But could you ask for a F&F on a well-serviced loan and, if so, would it go onto my credit report? (Just for information I can keep up the payments as is and am not looking to default.)

On another note, I will be coming into some money in a month or so's time (this time for sure *fingers crossed*) and am going to ask for another settlement fee anyway. I'm assuming these 'early settlement' amounts don't go onto your credit report as there's no debt involved - you're just claiming back already paid interest?

Am I making sense?

Bueller? Bueller?

Thanks in advance!

*meep*

BigDave81

The full and final settlement usually only apply to seriously defaulted accounts where the creditor is just happy to get any money back fromn the loan hence the 30% less amounts being quoted.

If the loan is all fine and payments met the only quote they will give you is to settle what is actually outstanding as per the terms of your agreement minus any applicable interest.

Thrifty_Pixie

Thanks, BigDave81 - I thought that was probably the case, but it never hurts to ask