Overpay or settle early?

kahunababy

Hey Guys,

Just a quick question for you helpful lot. I took out a unsecured loan with my bank (Lloyds TSB) for £15,000 nearly four years ago. The last payment of £404 is due in July. I have never missed a payment. My online banking says there is £376.82 left to pay on the loan although it does state that if I wish to repay the loan early the full amount would be higher than this.

My question is, if I ring up and make an overpayment of say £350 leaving just £26.82 to pay would next months direct debit be reduced to cover the outstanding balance plus any interest? Or am I better just asking for an early settlement figure and taking the hit on the extra interest (2 months I think but would have to check). Also, would this have any adverse affect on my credit rating?

Thanks in advance for any help

bengalknights

The best thing to do is phone up and check what would happen on the direct debit usually settling early is just a months interest.

kahunababy

Thank you, I was just worried that ringing up and asking for an early settlement figure would bar me from making an overpayment (think I read that on here somewhere some time back).

Think I will give the bank a ring this afternoon and just be honest with them and see what they suggest. I am just looking at getting rid of this now rather than pay another 5 months worth of payments resulting in paying back £2020 when there is only £376.82 left to pay. And I swear that is the last loan I ever get. Finally I have taken control of my finances and once this loan is done I will have an extra £400 a month to throw at my last remaining small debt which will mean that I will be debt free by the end of the year at the very latest!!!!

dantheman2010

kahunababy wrote: »

And I swear that is the last loan I ever get. Finally I have taken control of my finances and once this loan is done I will have an extra £400 a month to throw at my last remaining small debt which will mean that I will be debt free by the end of the year at the very latest!!!!

Roll on just under 3 years time when I will be in this position, literally cannot wait!

kahunababy

Yay, well done Dantheman! It's a great feeling to be in total control of your finances. I can't wait for this year to end and have it all out the way although hopefully it will be before that if I can get this loan sorted. I can honestly say that I will never get in to the state I was again. It's all down to this site that has made me stop spending money on needless things. I now enjoy saving money even more than I did spending it.

dantheman2010

Credit card 1 (£1.5k) - will be cleared on pay day this month
Credit card 2 (£3k) - will be cleared in June
Loan (£14k) - will be cleared Dec 2014
DFS sofa (£1.5k) - will be cleared in Dec 2014.

So in Dec 2014 i will have about £450.00 back to me a month, ready to save for a deposit on a bigger house. Roll on.

Apples2

How can you have 6 Months worth of £404 payments (£2,424) to make on a balance of only £376.82 ?

It makes no sense. I can't see where £376 could come into it unless it is the Capital portion of your £404 payment (so you are going to pay £27.18 Interest on it this month).

kahunababy

Hi Apples2,

I don't understand it either to be honest but I have checked the original paperwork and the last payment is in July, all payments are £404 (already made Febs payment so only 5 payments left) and I have never missed a payment or paid late?????

That is what the outstanding balance says when I log on to my online banking. Like most things with the bank I can't make head nor tail of it! Going to give them a ring this afternoon and see what they say. If I can settle early without a massive charge then I will as the quicker it's gone the quicker I am debt free!

Lifes_Grand_Plan

Hi OP,

What was the result of your call to the bank? I'm interested in the outcome of your query for future reference.

Mark64uk

On my last Lloyd loan i paid everything off apart from the last £10 as long as you let the last payment come out by direct debit you wont be hit with any early repayment charges.