Bank wont allow me to pay more per month off loan

davidac_2

Hi,
sorry i am new at this but my wonderful bank the Yorkshire will not allow me to pay more off my loan than i currently do. I am now in a position whereby i can pay an extra £50+ pm to clear the loan quicker saving around £3k in interest payments. However on ringing the bank they have told me this is not possible. Are they correct and does anyone have any advice on how i can get round the problem, unfortunatley my credit rating is not good.

inmypocketnottheirs

This is normally because when you sign up for a loan, you agree a term and repayment schedule. The banks then base their costs on the money advanced over the period agreed. Loans to my knowledge do not generally accrue interest daily (as mortgages) and more often than not the interest is added as one lump at the start.

What you may well be able to do in order to reduce your loan is make minimum extra repayments of say £500.

Generally speaking personal loans are not the most flexible way of borrowing.

Lotta_Littlies

Unfortunately some loans do not allow you to make overpayments and will state as much in the small print when you take out the loan. Have you checked this at all?

You could consider saving up the extra £50 into an ISA/high interest account until you have exceeded the amount outstanding on the loan and then pay it off at once when you've reached this point.

Lotta

regularsaver1

save up enough into a savings account to repay whole lot earlier

chani1

i agree with above plus even if you was able to pay extra per month if the loan if front loaded interest by making only extra pymts and not clearing in full you will still pay the full interest on loan only sooner so yes it clears it faster but with no saving to you . By saving the money up and clearing off in full early only then will you receive interest rebate.