Offering to settle loans

Cardinal-Red

After the sale of our house we've a bit of spare cash and we're thinking of settling our car loan, taken out in December 2005 with what was then the AA at a rate of 8%. We thought rather than investing in cash at 2-3% we'd pay off the loan instead.

Phoned for a settlement figure and it was higher than I calculated myself (albeit not an expert on the actuarial method!) and when I mentioned this to a friend he said I should write them a letter offering full settlement for an amount less than the current settlement figure.

I've heard of this before, but tended to think of it in terms of defaulting payers when the lender would cut their losses and be grateful for any cash they got back. Our loan has been paid on time every month though so this won't apply to us.

Does anybody have any experience of this. For the record the settlement figure was around £14k for the loan.

:beer:

Beast

Correct, if you're up to date with your payments they won't be interested in a reduced settlement.

Apples2

Agreed, why would they be satisfied with making less money than they gave in the first place??

Maybe if you were with Welcome or someone in trouble you may have luck..... but if you were with Welcome, you'd most likely already be in arrears. I don't think anyone pays Welcome back due to the standard of people who go with them.

the_insider

They would have to default the account before they would accept a reduced payment. And obviously there are long term implications on your credit file of having a partially satisfied default on your file.