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Tesco Bank paying off loan early - calculation help
Hi guys
I have read a bunch of posts on here and asked a Q or two regarding this and I am still confused. I have a tesco loan that I am paying back 2.5 years early (of 5 year term). I phoned to get a settlement figure and was quoted 1443.20 including a charge of 68.88 for early settlement (with full outstanding balance 1979.84). I have double checked the figures and just phoned them again now to check up, so please no questioning of the figures they are 100% correct. Tesco said that the saving of 500 odd pounds was the interest that I would have paid over the next 2.5 years if it went to full term.
Using the info from other posts about letting your final payment clear by DD, I worked out that without the penalty fee I would owe 1374.32 (i.e. 1443.20 - 68.88). I then paid 1200 by lump sum, leaving 174.32 of this amount outstanding.
So when my DD went out yesterday for 204.12 I would have thought the account would be closed, as I had avoided the early settlement fee and paid the non-fee part of the early settlement total sum. However, when I phoned up now the lady said that I still owed £39.1 to close the account.
Am I missing something here? I am sure the math is correct, so I must be misunderstanding all the other posts that refer to letting your loan clear early by DD to avoid the fee. It seems like I am still paying the fee as part of that quoted total.
Hope that makes sense.
I have read a bunch of posts on here and asked a Q or two regarding this and I am still confused. I have a tesco loan that I am paying back 2.5 years early (of 5 year term). I phoned to get a settlement figure and was quoted 1443.20 including a charge of 68.88 for early settlement (with full outstanding balance 1979.84). I have double checked the figures and just phoned them again now to check up, so please no questioning of the figures they are 100% correct. Tesco said that the saving of 500 odd pounds was the interest that I would have paid over the next 2.5 years if it went to full term.
Using the info from other posts about letting your final payment clear by DD, I worked out that without the penalty fee I would owe 1374.32 (i.e. 1443.20 - 68.88). I then paid 1200 by lump sum, leaving 174.32 of this amount outstanding.
So when my DD went out yesterday for 204.12 I would have thought the account would be closed, as I had avoided the early settlement fee and paid the non-fee part of the early settlement total sum. However, when I phoned up now the lady said that I still owed £39.1 to close the account.
Am I missing something here? I am sure the math is correct, so I must be misunderstanding all the other posts that refer to letting your loan clear early by DD to avoid the fee. It seems like I am still paying the fee as part of that quoted total.
Hope that makes sense.
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Comments
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raab,
All depends on when the settlement was calculated up to and how interest and your overpayment are applied to your account.
It might be that Tesco have got wise to people paying off most of the balance and have a clause in their conditions that triggers the fee if you pay off say more than 50% of the outstanding balance.
Without looking in detail at your loan contract there is no way of knowing.
RSmile, it makes people wonder what you have been up to.
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