Repaying early & avoiding charge

jmcdyre

Hi all
I've been thinking of taking a loan of £7.5k from first direct at 6.1% and paying my lloyds loan off (roughly the same amount outstanding).

My reason for doing this is that a) I am saving for a wedding, and b) my student loan repayments will be starting in a couple of months (old style loans) so I want to roughly maintain my current level of outgoings.

To settle the Lloyds loan will mean paying an early payment charge of £172ish, which I'd rather avoid. I asked customer services if I could pay say £7k off this month, then leave the rest for normal direct debits, but she said the system might still charge me as its designed to spot people trying to avoid the charge.

Is she correct and is it legal to do this!?

DCFC79

What does the contract say ?

Tixy

It will depend on whether your existing loan allows partial overpayments and what the original agreement states in relation to these.

Whethe ryou are charged or not won't be based on a whim, and whether they think you are trying to avoid the charge. You should be able to get a definitive answer from the bank as to what you would be charged though (but I wouldn't rely on what a customer services rep says on the phone).