How to overpay RBS loan.

Ransoman

Hello,

I find myself in a position to pay off my RBS loan (£12'000 over 60 months at 14.6%(!!)). I am just over half way into the repayment term.

I believe my agreement gives a 1% early repayment penalty.

How do I go about paying it off early? Do I just transfer the amount into the Loan accounts account number or do i have to go to the bank and ask for a settlement figure?

I was hoping to transfer just enough to leave slightly less than the final DD paymeny (say leaving £250 in the loan account so the last £285dd covers the last months interest) but i honestly don't know if this is the best way to do this.

Many thanks in advance.

bengalknights

Best thing to do would be to phone RBS and request a settlement figure this way all the interest etc is already worked out and all you then have to do is pay and settle it.

Ransoman

Thanks,

Can i overpay to reduce the sum without settling the debt so that i could save on interest charged on the early repayment fee?

jonjamie1970

They will give you a settlement figure taking all that into consideration and should be valid for a certain amount of time. Also ask for as copy in written format, then pay it.

Twister84

You can make partial payments towards a loan by visiting your local branch - you also have the option to reduce the term or reduce the monthly amount. You will be advised of this when you make the payment.

jamesd

Don't ask for a settlement figure and pay it. That's the most expensive way to clear a personal loan.

If you want to do it in one payment the cheapest way is to ask for the current balance, not an early settlement amount, and pay that. They are then required to calculate with the day you pay as the base date for interest instead of one 28 days later if you ask for a settlement figure.

The cheapest way is to make a partial settlement then let normal repayments clear the loan.

Since you already have a loan you might consider arranging to have the amount unpaid left just high enough so that you'll pay £1 a month until the normal end of the loan term. That'll continue generating paid on time records on your credit reports and that could be useful to your credit rating. The interest cost of doing this is minimal because the amount left borrowed is so small.

dantheman2010

jamesd wrote: »

Since you already have a loan you might consider arranging to have the amount unpaid left just high enough so that you'll pay £1 a month until the normal end of the loan term. That'll continue generating paid on time records on your credit reports and that could be useful to your credit rating. The interest cost of doing this is minimal because the amount left borrowed is so small.

I am wondering how this would work, as I am in a similar position. Say there is 30 months left so I cleared the balance minus £30 wouldnt they just take £30 so its all done rather than just £1 per month for 30 months? Unless I am missing the point in what you are saying?

Also the other point in paying the outstanding balance rather than the settlement figure. The outstanding is £15000 but the early settlement is about £9000, so how would I be better off paying the outstanding rather than early settlement.

I know your post was related to someone elses question, but it sort of applies to me too.

Thanks

jamesd

The default option usually just reduces the monthly payment amount and leaves the term unchanged.

The £15,000 would be the amount still owed plus the total of all interest payments until the end of the loan term. It's not the amount still owed. Ask them about the amount still owed if they don't tell you that. If you did pay off £15,000 they would refund you £15,000 less the settlement calculation for the day they receive the money. About £6,000. If they can't or won't tell you the amount still owed you could use a settlement figure and underpay that by a month or two's worth of payments. Then do the same once or twice more if you're trying to edge down to just a little left.