F & F payment offer?

TOOMUCHWORRY

Hi, My husband has a buisness loan of £12,200 which has 57 months left to run. We are thinking of selling 2 business assets which will hopefully accrue around 7k. Would it be worth asking the bank to settle in full as we are having difficulty paying our outgoings, even though, as yet we havent defaulted on payments?
Also if this was possible to do, does it affect his credit rating at all. We do not want another loan but are hoping to move away in about 3 years and will need a mortgage.
Thanks for any advice.

Apples2

Extremely unlikely they will happily forsake so much profit out of nothing but kindness.

Reduced settlement figures are normally agreed on accounts already in default. In that case the credit file is already smashed.

bengalknights

The best deal you will get to settle early payment is one months grace on interest if its in the contact otherwise you might incur a early repayment fee.

If however you default you might see deals flying at you.

paddyrg

Without killing your credit file for the next 6 years, the bank are unlikely to accept your offer, sadly. That said, if you reduced the principal by £7k, the monthly payments on the balance would be much lower, would they be affordable?

skintandscared_2

From experience I can tell you that such a low F&F figure won't even be contemplated unless you've been making token payments for a year or two, and perhaps the debt has been sold on. If you enter a debt management plan your credit rating is trashed until six years AFTER your final payment. If you want to maintain your credit rating you perhaps need to look at reducing other outgoings to allow you to continue the loan repayments.

TOOMUCHWORRY

Thank you for all replies.
I think that after all the advice we will plump for selling the assets and paying off a lump sum and then the reduced payments on balance.

Thank you for making things clearer.

jonesMUFCforever

Be careful - talk to the bank first!
They may well take the lump sum then tell you to pay the same monthly payment albeit over shorter time period.

To make your plan work you need the bank's agreement for a new loan for the outstanding amount.