Rule of nines?

paul75_2

Hi all, having done a quick search on here and found nothing I have a question. Many years ago I took out a variable rate unsecured loan that was subsequently bought up by a US based financial company, the chap who originally sold it to me mentioned something that he called the rule of nines and which he explained as follows.

Basically you take out a loan that you plan to pay off earlier than the term of the loan by paying increased payments to it, obviously the loan company wants you to pay off the loan over the full term and as such charges you a settlement fee to pay off the loan early, the chap said that if I paid a lump some equating to the balance of the loan minus 2 payments, then paid off the remaining balance, then the loan company could only levy charges upto a maximum of 9% of that reduced balance and not the total loan.

Was this chap spinning me a yarn to get me to sign up or does this actually work, anyone heard of this before?

loopy.magic

This sounds a lot more complicated then loans I've personally taken out or heard about. Ultimately you will have to carefully read through the terms and conditions on the loan agreement you signed to try to dicipher what he was telling you. If I were you I would ignore what he said, not because it's true or false but because you can find out the information you need in other ways.

A good starting point would be to contact the loan company and ask specifically for a settlement figure for the loan plus also a balance on the loan. From these 2 figures you'll be able to calculate how much of an early settlement charge they will levy against you.