Loan Settlements

Easymoney

Hi Folks

Im about half way through paying off a four year loan.

I am in the position now to pay off the remainder.
I phoned the loan company (A+L) for a settlement price and they were not giving me much off the outstanding amount.

Is there another way of clearing the loan and saving a few extra pounds while I am at it.

Thanks in advance

Xbigman

Dig out you credit agreement and see what it says about how they calculate the settlement figure. Also look up how they handle over payments. You might have the option to make an overpayment of 90% of the balance without penalty then pay off the last bit and only pay extra interest on that amount.

Also get the settlement figure and current balance in writing. Just phoning up for the figures can have odd effects, especially around the payment date.
Regards


X

Rafter

It all depends on how they applied interest.

Depending on how long ago your loan was taken out it might use something called 'rule of 78' or they may just be quoting a settlement figure based on daily interest or the amount due after your next payment goes through.

As Xbigman says there may also be an early repayment penalty depending on what their offer was at the time.

Dig out your loan agreement and see what it says. If you don't have it, call them up and ask whether there is a repayemnt penalty, how the repayment amount has been calculated etc etc etc.

R