Paying off my secured loan.

mattdud

I have a secured loan of £20000. I want to pay it off but they are charging me over £24500 for the privalage!

A lot of this is an early repayment charge.

I want to know what the best way of avoiding this penalty is.

Is it possible to pay off the majority of the loan leaving a samll amount, lets say £1000, and carry on paying that amount monthly until it naturally runs out?

Any advice will be greatly received.

Thanks.

Matt

frugalpam

mattdud wrote: »

I have a secured loan of £20000. I want to pay it off but they are charging me over £24500 for the privalage!

A lot of this is an early repayment charge.

I want to know what the best way of avoiding this penalty is.

Is it possible to pay off the majority of the loan leaving a samll amount, lets say £1000, and carry on paying that amount monthly until it naturally runs out?

Any advice will be greatly received.

Thanks.

Matt

When did you take out the loan? I'd ask them for a breakdown of how they have arrived at that settlement figure - they may be applying the 'Rule of 78' which has now been abolished for loans taken out after May 31st 2005.
Read about this at http://www.financesurgery.co.uk/loan/rule78.cfm

HTH
Pam

mattdud

I took out the loan in 2001. Is there a loop hole that will mean that I will not have to pay the charge?

Is it true that if you pay off nearly all of your loan then you can avoid the charge by continuing the payments as normal until the amount has been paid off?

Also, I borrowed £20,000 in 2001. I come I now owe £24,500 when I have been paying since then?

frugalpam

mattdud wrote: »

I took out the loan in 2001. Is there a loop hole that will mean that I will not have to pay the charge?

Is it true that if you pay off nearly all of your loan then you can avoid the charge by continuing the payments as normal until the amount has been paid off?

Also, I borrowed £20,000 in 2001. I come I now owe £24,500 when I have been paying since then?

Well, if you've been paying off the loan for around 6yrs, I don't know why you would have to pay them so much money. What was the APR on the loan? Sounds like it was extremely high.
As you took out the loan in 2001, they are able to apply the rule of 78 which is very unfair to borrowers. You can do a check on the figures here - it will show you how much interest and principal sum repayment you are paying out each month of the loan.
I'm having problems with a firm called Citifinancial - am putting it into the hands of a solicitor as they are trying to rob me blind.

Pam