So close

Aggy_2

Hello, sorry for writing this hear if it does not belong but my brain is completely fried now.

A little back ground.

I had a loan with lloyds for £7,000 plus some other little debt totallying nearly £4,000 which is only £11,000 and some may say not a lot but it is a lot to me. Well I reclaimed my PPI and paid off all my little debts and saved the rest and have been throwning money at my outstanding lloyds loan which I have only 25 payments left.

Now with the money I have left over from the PPI and my savings I managed to get the remaining balance together and went into the branch today to pay it off and become debt free for the first time in years. When I asked them for the settlement amount it was nearly 400 more than the remaining collateral and no mention of any rebate. When I asked about this they said it was normal and no rebate.

A friend of mine suggested paying it off leaving only one payment remaining and letting them take that so it automatically shuts down the loan.

My question is, is my friend right that I can do this and can the bank throw on 400 pounds on top of the remaining balance made up of interest and settlement charges.

thanks
Aggy.

ps. I've never missed a payment or taken a repayment holiday.

lindann_2

hi is there a cause in your terms for loan, if you pay this early you will be charged interest and charges. I remember we had a loan once we wanted to pay it off early, we would have had to pay extra, etc. hope you can understand this look at the terms. It seem to me you could put the money in the bank which will earn interest, then pay the bill each month as normal. Then closer to the end, pay it off, lessening the repayments extras for early close. best of luck x

beanielou

Nearly there ~ well done you

GeorgeUK

I would write to them requesting the balance outstanding, the settlement figure and a note on the calculations of any rebate for early settlement.

I don't know the dates involved, but you may want to look into the Consumer Credit (Early Settlement) regulations 2004.

I tried to work out what the rebate should be on my loan and it differed with the bank by over £200.

Your current balance should be
(total payments due * monthly payment) - (payments made * monthly payment)
This should show the balance taking into account the interest probably being front loaded.

Consumerist

Hi Aggy,

Well done for paying your debts down with such dedication.

Let us know what the bank's settlement figures are. They are entitled to delay settlement by a month from the date of your request and also charge another month's interest on top of that.

Nukumai

Aggy - I bank with Lloyds, and have had the occasional personal loan. Interestingly, a couple of years ago my local branch manager told me that so long as you don't pay off the full balance owed in advance of the loan reaching its planned termination, then the additional "charges" wouldn't apply.

For example, if I was paying a scheduled £100 per month and had £500 left to pay (ie. 5 payments) then the early settlement (ie. right now) might require me to pay, say, £600. However, if I were to pay a lump sum of £450, then - as I was not repaying early the entire balance due - the penalties would not apply (and the remaining £50 would be direct debited as usual, on my usual payment date).

Now, I never bothered to do this, so I can't verify that it worked in practice, but it might be worth asking at your local branch or via the telephone helpline.