Trying to paying a Natwest loan off in full...

Gem2509

Hi

I wonder if anyone can give any general advice/tips.

I currently have a loan with Natwest which I am hoping/planning to pay off and I have a 'plan'...just wondered whether if there were any better ways or problems with my way...

The loan with Natwest...

Taken out 08/2008 over 48 months - £11,200
Total amount payable - £14,520
Total charge £3,320
Interest 13.35% per annum
According to my online banking I have £6,332.70 left to pay at £303.92 a month (last month £73.57 interest, this decreases slightly each month)

So, today I contact them and ask for a settlement figure...£6513.17. I expected this to be much less, as I'm halfway through the loan, and the full charge was £3320, so I expected to receive around 1500 back, not be charged an extra 150 to cancel (which I can't see on my terms anyway) and only actually save myself around £400...although anything is better than nothing so I shall probably continue anyway...

But my first question is, is this correct? If there is no mention of 2 months interest on my 'customer copy of personal loan agreement', can they charge it? I was under the impression there wasn't a charge...

My second question...accepting that the above settlement figure is correct, am I better paying off for example £6000 (as I am allowed to make extra payments and either reduce the term or the monthly payments), ask them to reduce the term, and then pay £303.92 and any left over for 2 months? I spoke to Natwest lending centre earlier and suggested this and I raised the fact he probably wouldn't be able to discuss it, and he just kept saying 'I can't advise you how to pay your loan off, but yes you can just pay money in'...making me think I have maybe found a loop hole...?

In addition to the above, I plan to pay of the loan with £2850 on an MBNA platinum card which allows you to transfer money into your account, and the rest with savings. The MBNA is interest free for 13 months, however I also have a Barclay card which has just been accepted (I applied before realising that I obviously couldn't pay a loan off with a normal balance transfer...) which has % balance transfers for 16 months, so I plan to pay off MBNA with Barclay and then pay off the £2850 within the 16 months...

It seemed very complicated but then began to look too simple - can anyone comment on whether I'm missing anything here?

I know its 4% handling fee for the money transfer etc with MBNA, and I need to check for the Barclays as to whether its even worthwhile transferring or whether to try and pay off the MBNA within 13 months but assuming it must save me a few pennies, even if it's only about £200 in the long run, however it'd be nice to be rid of this loan in a year rather than 2...!

Any advice would be greatly appreciated

Many thanks in advance

x

jonesMUFCforever

It is normal to pay a penalty of 2 months interest to repay a personal loan early.
Interest is charged daily so there is nothing to ''get back''.

You don't say whether there is PPI on the loan - this will make a difference.

With some banks there is a loophole to avoid paying the early settlement fee - pay most of the amount off then let the bank take the final D/D as normal - if you overpay slightly they will refund (it is never a good idea to cancel the D/D - just in case your calculations are a bit out).

Unless you are totally convinced that you can clear the loan/card debt before the preferential rate runs out don't do it as the card rate will be higher than your loan rate.

Gem2509

Thanks for your reply. No there's no PPI on the loan. I think the loophole is the way to go...!

Clearing it shouldn't be a problem as I have the money each month, just started to begrudge paying so much interest!

Thanks for your input!

andymc29

Let me know how this goes. I've got a natwest loan I wish to pay off soon. I was aware of them probably charging me two months interest, but was thinking that I could just pay into it online, as it appears to show like a normal account. Maybe if I made a payment online leaving a small balance, then closing the loan would only cause two months interest to be charged on the small amount outstanding???

jonesMUFCforever

andymc29 wrote: »

Let me know how this goes. I've got a natwest loan I wish to pay off soon. I was aware of them probably charging me two months interest, but was thinking that I could just pay into it online, as it appears to show like a normal account. Maybe if I made a payment online leaving a small balance, then closing the loan would only cause two months interest to be charged on the small amount outstanding???

That is correct - or if you left the final payment to go through even if it puts the loan into credit (it will be refunded)then no ESF is payable.

fozmcfc

Maybe your loans are different to mine with Natwest, but I didn't think Natwest allowed extra payments. I thought they only allow the standard payment as per agreement or a full and final, with a penalty of 56 days interest.

catflea

When I worked in Natwest Lending (left about 15 months ago) lump sum payments were very much accepted. We weren't allowed to activly promote them (or the associated loophole) but we would certainly take them!

Gem2509

Hi to all that have replied...

catflea - it's nice to have confirmation of the 'loophole' so thanks :-) and yes, banks do generally like 'taking' money, they just ain't a fan of giving it back unless they're going to profit greatly!! lol

foz - I didn't think I could make overpayments in to mine either - I rang about 6 months back to enquire what the settlement figure was and it was higher than expected and so I couldn't afford to do it, and the guy said if I had some savings I could still put them in there as an extra payment and either reduce the payments or the term.... to be honest I rang back the next day to speak to someone else to clarify it but seems to be the case and again spoke to 2 advisors, 1 in branch and other in the telephone lending team who advised the same...so guess we can! Maybe yours is different, but if its something you want to do I'd certainly enquire as they didn't sell it saying I could, it just seems to be a very general 'yeah you can overpay into loans whenever with us' whenever I speak to a Natwest advisor...

andy - I thought the same with the online payment as, as you say it looks like a normal account, I even saw the screen in the natwest yesterday and they have my loan labelled as an overdraft on their system!! But there isn't a way to do it online, I think he called it a 'non-standard payment' which you can either do over the telephone or in branch at the counters (you don't need a special appointment). You do however need to have the money in your natwest current account in order to do it however, although as I'm typing this it's occuring to me that just because you have a natwest loan doesn't mean you bank with them, so that might be rubbish I've been fed, maybe it's just quicker and thats why when i asked he said yes....

I'm basically going to get all my pennies in my unused (other than for that loan payment) current account just to leave enough for say 1.5 months payments left, ask them to pay it all in the loan, then reduce my term to 2 months and hey presto (hopefully!) the loan is gone! Already occurred to me however to ensure there's only enough in the account to pay off what you want - as if the full amount is there it really wouldn't surprise me if they paid it all in and charged you the interest if they realised what you were doing and was a jobsworth....which granted you could argue that isn't what you requested...but it's easier to just be on the safe side...!

I'm awaiting my MBNA credit card to enable me to do the money transfer for the extra £3000 but once I've got it I will update as to how Natwest react to my 'loophole'...and just hope I don't get a 'jobsworth'...!

catflea

Gem2509 wrote: »

You do however need to have the money in your natwest current account in order to do it however, although as I'm typing this it's occuring to me that just because you have a natwest loan doesn't mean you bank with them, so that might be rubbish I've been fed, maybe it's just quicker and thats why when i asked he said yes....

Thats because the account numbers for NW (and RBS) loans dont confirm to the normal verfication required for standard accounts - if you try and arrange a payment directly from another bank they will say that the account cant exist as its not a valid account number.

I'm not sure entirely how account number verification works, but accounts dont just run numericly. ie. if you have account 12345678 the next account that branch opens will not be 12345679 it will prob be 12345686 because one digit acts as a "check" digit...

(sorry, blinding with science.....)

Gem2509

Ah right, so just out of interest then, does that mean you have to have a current account with Natwest in order to pay lump sums off the loan? Not that it matters to me as I do have one...but interesting to know for future reference...!

catflea

Basicly, Yes! 9/10 though, Natwest will insist that you get an account with them to service the loan in the first instance