newly redundant

barbeler

hi, new to this so please bear with me if i maybe in wrong forum, i have recently been made redundant after 26 years, i was wanting to use my redundancy money to pay off my debts and rang for settlement figures for these, i remember someone sometime saying not to pay off the whole debt in one go to save on penalty charges, yet when i asked the company (bank) my debt is with they said i would still be charged the same amount as i would still be ending the loan before term, any thoughts would be appreciated. Thanks

izzybusy23

barbeler wrote: »

hi, new to this so please bear with me if i maybe in wrong forum, i have recently been made redundant after 26 years, i was wanting to use my redundancy money to pay off my debts and rang for settlement figures for these, i remember someone sometime saying not to pay off the whole debt in one go to save on penalty charges, yet when i asked the company (bank) my debt is with they said i would still be charged the same amount as i would still be ending the loan before term, any thoughts would be appreciated. Thanks

I believe the only way you can get a reduced settlement figure is to have either missed several payments and defaulted on it or the debt is passed to a DCA. If you haven't missed payments or defaulted or shown that you are in financial difficulty then the settlement figure will remain the same as it always has.

I am sure somebody will advise if this in not correct advice.

DarkConvict

It depends entirely on your debts.

Paying off loans early can mean you save on interest, some loans do have penlty charges for early repayment though, however some loans have interest applied on day one (front loaded) rather than every month, so paying it off reduces the loan term but not the amount you pay as the interest has already been added.

Debts which have been defaulted and now in the hands of collection teams/debt collectors will often accept a settlement offer if they think you are unable to repay the full amount. I.e. It willt ake to long to repay or they will never get paid. Many people do take out loans they can't afford or hit major problems, and end up in these circumstances.