Loan overpayments

Giarc1982

Hi, Anyone tried overpaying loans how easy have you found it for them to update the interest properly?

I consolodated my debt Nov 2011 so that it was covered by The Consumer Credit (EU Directive) Regulations 2010.

My loan is with Halifax and their website is very vague

"If you let us know before you make an overpayment we'll apply this to your loan and this will reduce the total amount of interest you pay over the term of your loan and may reduce your loan term."

Any way I spoke to 3 people on the phone to give this notice only one took any details of the ammount I wanted to overpay.

Now I've phoned them up after the overpayment and the current balance doesn't represent any interest adjustment (I made £2500+ and still have over 4 years left @ 19.9% so there should be a £2000+ Interest reduction) I spoke to 2 different people and get very confused feedback, any advice?

bengalknights

Was pretty easy with santander just call pay and they then send text/email confirming rest

InsertWittyName

The interest isn't front loaded, they add interest to the outstanding balance each month.

Your overpayment will reduce the interest they charge in subsequent months.

I also have a Halifax loan and took it out a few months before you.

My online banking show the balance of the loan, which is reducing as expected (including less interest being charged) when I make any overpayment.

If you settle the outstanding balance of the loan before you reach the original loan term then it will just end then.

Giarc1982

The figure they told me over the phone was
53*MonthlyPayments-OverPayment

Giarc1982

InsertWittyName wrote: »

My online banking show the balance of the loan, which is reducing as expected (including less interest being charged) when I make any overpayment.

Its interesting you mention online banking when discussing making overpayment and account management on the phone the lady said I could do it all online. A month after getting the loan however a outdate online pin arrived for an obsolete system, I was then informed that loans could only be managed via telephone banking

InsertWittyName

I had online banking already with Halifax, so that may have something to do with it. It's worth noting that all I can actually see on the loan is the payment date, monthly payment amount and the outstanding balance. There's no ability to directly pay it off or see any kind of statement.

I'd ignore the figure they gave you - go with that you know to be right.

pheonixrising21

As people have said, the interest isn't front loaded but is instead added monthly. However, they do know how much interest is chargable over the life of the loan. This is your monthly payment x number of months (e.g 60). They often use an "outstanding balance" figure, which is your monthly payment x number of months left (e.g 47).

The outstanding balance is different to a settlement figure. The settlement figure is what you have to pay if you end the loan now. This usually has up to to two months interest on it as a settlement charge. The further you are away from the end of the loan the smaller this will be when compared to the outstanding balance.

Take my car loan for example, I am 2 yrs into a 5 yr loan. My outstanding balance is nearly £9k. My settlement figure is just over £7k.

if you make an overpayment, one of two things will happen. Either the term will remain and the payments fall, or the paymenst remain and the term reduces (with a reduced last payment if the overpayment doesn't knock a whole number of months off). Sounds like yours is the latter.

Giarc1982

Thanks, they are going to be sending me a statement I'll follow up afterwards, its kinda annoying as I want to start making regular overpayments just seems alot of hassle for something that should me straight forward

Giarc1982

Just got off the phone with Halifax for like the 9th time, they sent me a statement (with a leaflet about arrears help the cheeky gi...) and still no update to the interest.

Apparently there is a 10day period that they'll wait before making the calculation because of some sort of Direct Debit indemnity that would allow be to call the money back.

Well Halifax are giving me £25 because I complained but on the whole at the moment the Halifax Loan telephone operators:

*Don't know the procedure for overpayment notice(I phoned 3 times, third time by accident as I'd deleted the account details I was to make the payment to. It was only the 3rd person that asked for the ammount I was planning on overpaying and that was after I prompted him)
*Don't know the difference in new loans and how interest is affected.
*Don't know about this 10day wait period before interest recalculation
*Don't know the calculation and cannot provide estimates