Unsecured Loan

SPJ29

I have not long had a windfall and I wanted to pay off my small bank loan early. I have been paying it for about 3 years.

The loan is for £4000 but when I phoned the bank for a settlement figure they told me that it would be around £3200 this was a few months ago so obviously that figure will be lower now.

The point is I thought that like my Car finance that I would be able to settle the LOAN amount with maybe a small early payment penalty.

somethingcorporate

Get a real repayment figure in writing from the bank.

SPJ29

Youre short SHARP answer doesnt clarify anything.

The settlement figure is from the bank. Does this mean that if I go into my branch then they will be able to give me a settlement figure for the Loan amount and not the interest as well.

Apples2

You don't know if you have been given a settlement figure or an outstanding balance.

Get the settlement figure from the bank in writing . It will be valid for no more than 30 days

withabix

Most banks charge a fee of one month's interest for early repayment.

The settlement figure will be calculated based on the period you have had the loan.

You didn't say how long the loan was originally for - in the early years of a loan, most of the monthly repayment is effectively interest, in the later years it is mainly capital.

When you take out a loan, they work out the total amount repayable over the term and split this equally over the period, in order to give you level repayments, however the proportions of your repayment as capital and interest change over the term as a result.