Early Loan Repayment settlement with Natwest

GuyWood13

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Hi,

I need help from loan experts to please verify if this resettlement figure I've got is correct.

Took at loan from the Natwest at the start of 2010 for the following:
Loan amount £14000
Period - 60 months
APR - 13.4% (interest at 12.61% per annum)
Monthly installments - £315.83
Total repayable - £18949.80

So...

I've made, as of today 19/10/2012, 34 payments and never missed meaning I have 26 remaining.

Today I got a quote of £7327.44 to pay it off which is valid until 16/11/2012. This is broken down by:
Principal outstanding - £7136.95
Interest - £52.11
Interest for Early/Settlement - £138.38

Does this sound right?

Financially I am very ignorant and thought (stupidly) that I would be able to pay whatever remained interest free but have since learn that it doesn't work that way.

So its a lot more than I originally thought. Also I didn't shop around when taking out the loan and have a good credit rating so have also been stupid there because I think I could have got something at about 8% APR but thats a different matter.

I understand that I might be able to avoid the early settlement interest by making a big overpayment then just paying the last of my installments but the adviser from the Natwest said that this too would incur a charge which could only be generated once the sum had been paid. Though their website says there is no charge for overpayments I believe.

So I'd like any advice on how to reduce this figure please? I realise I'm going over a lot of old ground on here as I have done a lot of reading but just wanted my own case looking at by more experienced people. I even calculated what my settlement would be if it was done by rule of 78 and it worked out cheaper which is why I am so annoyed, mainly at myself for my ignorance.

Any advice greatly appreciated.
Guy.

jobdone1

Yes this is correct the way that i paid my loan off early was to pay near to the full amount so in this case £6700 let next months direct bedit come out which should be close to the £7100 and any intrest on the amount from now until the final dd payment on the small balance. I avoided nearly £300 in early settlement charges and only £70 of the £300 in interest, if that is clear. Basically i kind of understood them to be charging me an early settelmentfee plus 28 days in trest in advance of the out standing balance. Just an option it worked for me.

Tixy

Yes that looks about right.

The Balance looks correct (on a quick spreadsheet I come out with £7135.26 after 34 months)
The first interest figure is likely the interest accrued since your last payment, interest this month will be around £77, so if its about 20 days since the last payment that would be about right.
Early repayment fee of 2 months also looks right (on my calc it comes to £147).

You say the website says there is no charge for overpayments - is this specific to your loan? if not its likely that that is based on the new rules for more recent loans than yours.

GuyWood13

Tixy wrote: »

You say the website says there is no charge for overpayments - is this specific to your loan? if not its likely that that is based on the new rules for more recent loans than yours.

I tried to post a link but it wouldn't let me. Its says 'some' loans taken before November 2010 can be overpayed on penalty free. Of course, this doesn't guarantee it but gives some hope.

GuyWood13

Just a further point to this...

I received two early settlement quotes in the post from the Natwest yesterday.

One valid until 15 November 2012 for £7325.13
One valid until 17 December 2012 for £7401.76

How can this be? I'll have made an extra payment, obviously, by the later date so how can the settlement amount be more?

_Andy_

GuyWood13 wrote: »

How can this be? I'll have made an extra payment, obviously, by the later date so how can the settlement amount be more?

Have you rung them and asked?

GuyWood13

_Andy_ wrote: »

Have you rung them and asked?

Okay, so I rang them and asked just now...

Basically its a mistake and they haven't taken the future payments into account. He said they would honor the lowest settlement figure. Fine.

I then asked if it would be possible to make an overpayment, which it is. But if I do so, I am unable to keep the repayments the same and they'll be adjusted to fit the length of term left (2 years). So say I pay off £6000 then I'll be paying £50ish pounds a month for the next 2 years.

Again, can they do this?

Tixy

I then asked if it would be possible to make an overpayment, which it is. But if I do so, I am unable to keep the repayments the same and they'll be adjusted to fit the length of term left (2 years). So say I pay off £6000 then I'll be paying £50ish pounds a month for the next 2 years.

Again, can they do this?

Yes, they can state that partial overpayments reduce the repayment amount not the term of the loan.
But you could always overpay again in future months. Or can repay in full the then balance in full in a a couple of months.

thriftymomma

GuyWood13 wrote: »

Okay, so I rang them and asked just now...

Basically its a mistake and they haven't taken the future payments into account. He said they would honor the lowest settlement figure. Fine.

I then asked if it would be possible to make an overpayment, which it is. But if I do so, I am unable to keep the repayments the same and they'll be adjusted to fit the length of term left (2 years). So say I pay off £6000 then I'll be paying £50ish pounds a month for the next 2 years.

Again, can they do this?

The direct debit going forwrd may be for £50ish, but there is nothing stopping you making manual payments to keep the monthly payment the same.