Pay my loan off early

justthecook

Hi guys
I have searched the web over on this topic and come up empty, so posting here in the hope of some advice and success or failure stories before making my decision.

In February 2012 I took out a loan for £3500 and now showing £2650 left to pay. I have come into some money so want to pay it off early but obviously get charged the interest if I ask for a settlement figure. The bank has already had £300 in interest which I think is fair for a loan I've only had for 5 months.

What I want to know is has anyone paid most of the loan off and left 1 or 2 payments left to go out, thus making the banking system into thinking that it has been paid off normally????

My wife had a loan last year and was told by the banking rep that if we wanted to pay it off early just leave the last payment to go out normally and it will avoid any ERC's.

We are trying for a baby and so any money saved is a blessing.
Any advice would be greatly appreciated.

Thanks

arcon5

justthecook wrote: »

Hi guys
I have searched the web over on this topic and come up empty, so postinghere in the hope of some advice and success or failure stories before making mydecision.

In February 2012 I took out a loan for £3500 and now showing £2650 left topay. I have come into some money so want to pay it off early but obviously getcharged the interest if I ask for a settlement figure. The bank has already had£300 in interest which I think is fair for a loan I've only had for 5 months.

What I want to know is has anyone paid most of the loan off and left 1 or 2payments left to go out, thus tricking the banking system into thinking that ithas been paid off normally????

My wife had a loan last year and was told by the banking repthat if we wanted to pay it off early just leave the last payment to go outnormally and it will avoid any ERC's.

We are trying for a baby and so any money saved is a blessing.
Any advice would be greatly appreciated.

This is not logical.

You borrowed £3,500.
Say for example your interest was £800.
You owe £4,300.

If you now pay the principal, you owe £800 still for example.

You are not "tricking" the banking system, you are defaulting on money owed which will affect your credit status.

P.S. For all the bankers out there who wish to comment saying that I shouldpay off the loan with the interest just so that you can have your £1.2 millionbonus in a few months time, please don't bother as I don't earn the same as you.

Their bonuses is really not relevant.

The fact of the matter is you entered in to a contractual agreement knowing how much you will repay.

trikidy

I was told this too, I had monthly payments of £95, if I wanted to settle it early I would be charged extra, but I am free to pay off extra each month.

So with £400 left to pay I went in and paid of £305, next month the normal payment taken out and loan sorted.

opinions4u

P.S. For all the bankers out there who wish to comment saying that I shouldpay off the loan with the interest just so that you can have your £1.2 millionbonus in a few months time, please don't bother as I don't earn the same as you.

1. Do you really expect any banker who earns that sort of money to comment on your post?

2. Those bankers who do post on the forum will invariably give you an answer that will be most cost effective to you.

For the record, despite a 20 year career in the industry my total earnings, even if adjusted for inflation, fall significantly below half the glib bonus figure that you use.

justthecook

As I seem to have upset a few bankers with my comments on over inflated bonuses, which maybe was a little over exaggerated, I have now revised my original post and thank the bankers for their input.

DCFC79

justthecook wrote: »

As I seem to have upset a few bankers with my comments on over inflated bonuses, which maybe was a little over exaggerated, I have now revised my original post and thank the bankers for their input.

Yet the comment about the bankers has been quoted so it was pointless in deleting it form the originial thread

arcon5

justthecook wrote: »

As I seem to have upset a few bankers with my comments on over inflated bonuses, which maybe was a little over exaggerated, I have now revised my original post and thank the bankers for their input.

I'm not a banker :eek:

As i've been warned, we're supposed to be nice to members

CLAPTON

the situation is that lenders can charge an early repayment fee of up to 2 months interest
they can also charge the equivalent for overpayments too

so whether paying most off and then letting that last payment go out in the normal way may or may not work

in any event you will save a significant amount of interest so go for it.

CLAPTON

arcon5 wrote: »

This is not logical.

You borrowed £3,500.
Say for example your interest was £800.
You owe £4,300.

If you now pay the principal, you owe £800 still for example.

You are not "tricking" the banking system, you are defaulting on money owed which will affect your credit status.



Their bonuses is really not relevant.

The fact of the matter is you entered in to a contractual agreement knowing how much you will repay.

this is simply not the law and is wrong.

arcon5

CLAPTON wrote: »

this is simply not the law and is wrong.

So the law supports a debtor not paying a fixed term agreement in full because 'they've already made a fair amount of interest on the loan'
?

or are you saying the law says interest cannot be added to loans, thus only the principle debt is owed
?

Maybe you can elaborate. Sounds crazy huh

CLAPTON

arcon5 wrote: »

So the law supports a debtor not paying a fixed term agreement in full because 'they've already made a fair amount of interest on the loan'
?

or are you saying the law says interest cannot be added to loans, thus only the principle debt is owed
?

Maybe you can elaborate. Sounds crazy huh

The contract between the lender and borrower allows the borrower to repay the loan in part or in full early;
the exact rules about early settlement fees are governed by law.


why is that amazing?