Black Horse Settlement!!!

liam12779

HI,
hoping someone can help me.
Ive got 2 years left on my load (£4000.00 balance) £241.00 per month.
When i phoned today for a settlement figure i was quoted £4700!!
When i took the loan out, the bank manager said if i was ever to settle the loan, never pay the full amount off. Is this to do with an early repayment charge?
Im wondering if i pay most of the loan off apart from next months payment, i havent settled the loan in full, so would i still be charged an early repayment charge?
Just hoping for some advice before i phone them.
:mad:

Rupert_Bear

Leave amount £1 outstanding and then phone for a settlement figure;. It will then be based on that £1 only

liam12779

That sounds a lot better than the £700 they tried to charge me. Unbelievable that they can do this to people!!

wonderpupp

Umm. 2 years lef t= 24 months @ 241 per month = 5784 left to pay on original amount.
Take the 4700 settlement figure...

GEEGEE8

I think they front end load it with interest.

So you pay the interest first, then the balance.

It's a common thing that you probably aren't either told or understand.

liam12779

GEEBEB, your right. Do you think that paying off most of the loan and leaving a small amount then phoning for a settlement figure is the best way to go, therefore not as much interest on the final amount?

GEEGEE8

Well, from what I remember you will just be paying more of the interest.

Say you take out a £4000 loan. Interest at 25% over the term. You pay back £5000 in total (simple way of describing it lol).

If you then pay off £500 and want a settlement figure, it would be £4500 to settle.

If, as you suggest, you pay off more and then ask for a settlement, I would guess it'll all add up to the same amount anyhow.

So, with the above example, you pay off £2000 extra, so £2500 paid on the £5000 total cost of the loan, you still have another £2500 to pay.

So, unless I've got it completely wrong, you will end up paying the same whenever you settle and however much you put up front now, as it's determined at the start of your loan what the total you will pay back will be. Regardless of when you repay it.

liam12779

I see what you mean. I was under the impression that the 56 (i think its 56 days interest) day interest when you settle is on the amount you are settling on. So if i ask to settle now then the interest is on the £4000 i have left. If i paid £3500 off the loan then asked for a settlement fee then the interest amount would be on the £500 left, therefore the interest would be a lot lower. I know i'd still be paying the £4000 off, but the interest would be lower than the £700 they are quoting me if the final figure is lower??

GEEGEE8

liam12779 wrote: »

I see what you mean. I was under the impression that the 56 (i think its 56 days interest) day interest when you settle is on the amount you are settling on. So if i ask to settle now then the interest is on the £4000 i have left. If i paid £3500 off the loan then asked for a settlement fee then the interest amount would be on the £500 left, therefore the interest would be a lot lower. I know i'd still be paying the £4000 off, but the interest would be lower than the £700 they are quoting me if the final figure is lower??

Can you ring them and ask? they might be able to explain how they do it?

runninglea

Hi - if you paid 24 payments of £241 then you would pay £5784 in total.

Now to settle you have to pay £4700 thus saving you £1084 which would be the interest