Paying off loan early?

aesir22

Hi all.

I have a Barclayloan, with the lovely 23% ish interest on it. I originally borrowed £1000, then topped it up with another £1000.

I pay off £101 a month, and at the moment when I check online, it says I owe £949. I also know that about £21 of what I pay goes on interest, so I chip away £80 a month off my loan.

I am now in a position to pay it off early. I have the money and I planned to pay it off tomorrow. I told my mum this, and she said I should get money back?!?! I thought I would have to pay a bit extra to pay off the loan early, but she said with hers she got money back (different bank) because of the interest that had been calculated over the duration of the years. My loan, at the current amount paid each month, would be finished in 12 months. And she is convinced I should get back 12 months worth of interest. Or something like that, I'm sorry I am not being very clear, my brain has been overloaded tonight lol. It might not have been money back, she might have said the amount she had to pay as a final figure was less than her internet banking had on the screen. Sorry lol

So in short, if I pay off my barclayloan 12 months early, will I get something back, or will I actually have to pay the settlement fee like I thought originally?

Thanks all

ViolaLass

It depends on the details of your loan, which only you and Barclays can know.

[Deleted User]

usually you will pay the outstandinga mount plus 1 or 2 months interest,no way do you get 12 months interest back...mums eh?

MFWannabe

You don't get money back; but what you need to do is ring them and ask for a settlement figure which will probably be less than what you see on the screen at the moment

The_Boss

Exactly as the above poster says - so outstanding balance is £949, but the settlement figure will be less than this because the outstanding figure includes interest for the rest of the term which you will not be paying if you settle now.

zppp

The_Boss wrote: »

Exactly as the above poster says - so outstanding balance is £949, but the settlement figure will be less than this because the outstanding figure includes interest for the rest of the term which you will not be paying if you settle now.

That's only if the loan is front loaded, i.e. all of the interest is added at the start of the loan, you may get a rebate for repaying early less a 58 day penalty.

However many loans accrue interest on a monthly basis nowadays, so in that case it may work out more than what you see on screen due to the 58 day penalty.

Only way you will find out is by contacting your loan provider.

ViolaLass

zppp wrote: »

Only way you will find out is by contacting your loan provider.

My point exactly.

The_Boss

True. I was basing it on my circumstances with a loan I have now and previous ones I've had.

CLAPTON

zppp wrote: »

That's only if the loan is front loaded, i.e. all of the interest is added at the start of the loan, you may get a rebate for repaying early less a 58 day penalty.

However many loans accrue interest on a monthly basis nowadays, so in that case it may work out more than what you see on screen due to the 58 day penalty.

Only way you will find out is by contacting your loan provider.

the 'two' methods will give identical results as the settlement figure MUST be worked out according to the CCA formula except that the 58 days interest is optional.

zppp

CLAPTON wrote: »

the 'two' methods will give identical results as the settlement figure MUST be worked out according to the CCA formula except that the 58 days interest is optional.

Not saying they work out differently.

Just stating that the OP should not expect a rebate, if the loan interest is added monthly rather than front loaded.

mano25

I want to pay my loan earlier ..please can anyone have any idea.