Is it worth paying off a career development loan in a single payment?

abunchofletters

My girlfriend took out a Professional & Career Development Loan with Barclays to help her survive whilst pursuing her masters degree which ends soon. Here's the details:

• APR: 7.7%
• Amount: £6,000
• Monthly Repayment: £127
• Number of repayments: 60
• Total amount Payable: £7,620
• Term: 69 months [interest isn't charged until one month before the first payment is due, then 9.900% p.a. will be calculated daily on the balance outstanding and debited to the account quarterly in arrears until the loan is repaid in full
• Total Charge for Credit [interest]: £1,620

There is something curious in the Your Right to Repay the Loan Early sections:

You have a right to bring this arrangement to an end at any time by making a single payment. The amount that you would have to pay if for example you wish to settle when a quarter of the repayment period has passed would be £5,276.57; if half of the repayment period has passed would be £3,868.75, and if three quarters of the repayment period has passed would be £2,008.93. In calculating the amounts shown, no account has been taken of any variation which may occur under the agreement. These amounts are accordingly only illustrative.

It sounds like you would not gain anything by paying the loan off early. We're not in a position to do this just now anyway, but can anybody tell me if there is any benefit to paying off early and if so, what significance?

abunchofletters

Any maths whizz types or financial pros can help us out?

iwanttoberich

Hi

I am not a financial whiz, or even close, but I am also paying a career development loan. I spoke to Barclays a couple months ago to clarify my current balance and happened to ask about paying it off early. The lady said I would just pay whatever the amount was on the day. She quoted my figure. I made sure to ask if it included interest etc. I think the amount is recalculated up to the time that you call, eg if you want to pay in 4 years instead of 5, it's reworked based on the new term of the loan. So the final figure you get will change whenever you call. Paying it off quicker means less time to pay interest on it. The best thing to do is call them and ask.

abunchofletters

Thanks; we'll give them a call when we are ready to pay the remainder off.