Overpayments on a tesco loan

gaz9448

Long time lurker her, just after a little advice really.

I want to make some overpayments to my tesco loan, because i quite frankly want to get rid of the last debt i have.

we got this setup in mid 2009 and were originally told we could NOT make overpayments. This story has now changed, and after checking the website, there are 2 sets of rules set out below

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Question:
Can I make additional payments to my loan?

Answer:
Loan applications made on or after 11 June 2010

You can make an additional part payment to your account. There are two ways of doing this, just let us know which way you’d prefer before making a payment:

Your monthly payment can be reduced and the term of your loan will remain the same;

or
Your monthly payment remains the same and the term of your loan can be reduced.
Both options will give you an interest rebate, which means you will pay less interest overall on your loan, but you will get a greater interest rebate with Option 2. If your account is in arrears, we will use any extra money you pay to clear your arrears first.

If you have no arrears on your account you can make a payment using your debit card and calling 0845 600 6016 or you can send us a cheque made payable to Tesco Bank. Our address details are: Tesco Bank, Loans, PO Box 27014, Glasgow, G2 9FE.

Loan applications made before 11 June 2010

Any additional payments made will be applied to your loan and may reduce the number of monthly payments on your loan. However, there is no interest benefit to making an additional payment to your loan. This means that the amount of interest you pay on your loan will not reduce as a result of this payment, nor will you earn interest on the money sent.

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It seems a little unfair in the way things are setup. If i had my loan later then i could have made overpayments that would help with the interest, but because it was before, i get penalised slightly. I'm wondering if there is anyway of getting them to accept that this is unfair, rather than having to refinance again.

Either way i can't really do anything for a short while until the PPI claim has been dealt with, but after that, i want to get rid of this debt as quickly as possible.

I'll get a sig sorted out, and play a more active role in the forums from now, as looking round there is some great ideas and information.

Thanks

G

Tixy

There was a change in legislation that means that on new loans creditors have to allow you to make partial overpayments - which is why lenders have had to have a change in their loan agreements.

With your older loan if you pay off early in full as lump sum you would save interest - compared to leaving it to run full term. Therefore perhaps the best way forward is to put the extra amount you wanted to put to the loan into a savings account and when you have enough to settle in full then do that?