Paying Off A Loan Early

enaid

I had a loan with Natwest and when I remortgaged with them I borrowed little extra and paid off a loan I had with them. I was under the impression that the penalty for paying off the loan early would be one months interest. When I went in to pay it off the actual amount was over £400 . I challenged this and rang the loan dept the chap there said there was a system for these charges and he had been shown it but he did'nt understand it himself. Can anyone throw a light on this subject for me?

thesaint

Ask for a copy yourself, you will then see how they worked it out.

mountainofdebt

I think it all depends as to when the loan was taken out as to what early repayment charges can be levied.

When did you take the loan out?

dsouter_2

can anyone help i tryed to cancel my ppi so i sent a letterto lloydstsb i recieved a reply stating that i could not cancel it but on the other hand they said i could take out another loan and would,nt have to pay the ppi so could any one give me some advice

enaid

I got a copy of the redemption figure and I have it somewhere but it was just a figure no working out or info on how the figure was arrived at.

enaid

I took out the loan in Oct 2004 for £10,000 I made 20 payments at £196 month I paid off the loan in July 2006. The total cost of the loan over 5yrs was £1170 that meant I had paid £3920 off the loan leaving £7840 still owing with 1 months interest or so I was led to believe. the actual cost to pay it off was about £400 pounds more than this, which I argued was not one months interest but all I was told was it doesn't work like that, but no one at the bank or lending centre could explain how it did work.

jonesMUFCforever

The total cost of the loan figure £1170 is irrelevant here and this is why I think you are getting confused.
The interest figure is what they would charge you if you had the loan over the whole 60 months.
The interest charge would be more in the early years as there is more o/s and vice versa.

Hope that explains it a little better.
Once you have a statement of the loan it should appear clearer for you.

mountainofdebt

This leaflet may help you decide whether or not you have been overcharged
:
https://www.fla.org.uk/downloads/download.asp?ref=2404&hash=67de8f1d2dd86933532bd23099c09ab2

The rule of 78 applies to loans taken out before 31/05/05 so this is the calculation you should use in determining the early repayment figure.

enaid

Thanks very much for that information the formula was not that difficult if I could work it out, it's a pity though that the bank workers havn't got a clue how it works. Going now to try and find my paper work for the settlement if I can't find it then I will ring the lending centre for the info, if they are £1 out I,ll Have em. Thanks again even if they are right the info is good to have anyway.

enaid

Went in the bank today and they got the figure that I paid the loan off. They were right unfortunately but no harm done and I now know the method to work out the settlement amount which may come in handy for someone someday. Thanks for your help.