Do I have to pay the full amount?

runningoutoftime

Hello,

I owe a big bank £22K (managed loan). It is six months in arrears, although I have been paying it for the last four or five months (so not going more into arrears). It is my only debt, and has about eight years left to run on it.

In about a month's time, I will be in a position to pay the whole thing off. A relative passed away last year and the sale of the house will leave me with more than enough to clear the whole lot. (I have told the bank this before, in letters, to try to get them off my back).

My question is: is there any scope to negotiate a lower figure with them, for an early settlement? If so, what sort of figure do you think they might accept and how would I go about it?

Thanks.

dib-dab

Is it a loan which allowes early repayment? Usually in the terms there will be a 'fee' for early repayment such as 2 months interest. So you would save the amount that it would have cost you in interest over the next years (which will be a considerable amount I would imagine) minus the charge for early repayment. If you call the bank they will be able to give you the settlement figure.
I don't know anything about negotating for a reduction on the capital though but I'm sure someone will be along soon who can advise.

GeorgeUK

They would normally only entertain a settlement if you have defauted on the account. If you haven't i think they will still demand the full amount - you may not be required to pay the full amount of interest that would have been applied but there may still be an early settlement charge.

runningoutoftime

OK, thanks.

Should I write to them and suggest a figure? If so, what figure?

The £22K I quoted is an approx settlement figure, based on a figure they gave a few months ago.

CluelessJock

What are you on?

Did you borrow the full amount, yes.
Did you spend the full amount, yes.

You can afford to pay the full amount.

So why do you believe you should have to pay less?

GeorgeUK

I would phone and ask them and ask for an early settlement quote.
Then you can decide what to write as an offer (once the money's received).

Ames

I'd base an offer on the original amount it was to cover. Managed loans are evil with stupidly high interest rates, you may find that the original amount hasn't changed despite you paying for however long. I remember someone paying something like £65 a month and only £1 was going off the debt.