LloydsTSB Early repayment calculations

Longshot_3

Hi All

I have just this week taken out an unsecured LloydsTSB loan for £25000 over 60 months at a rate of 8.9%.
I will be paying out £513 per month over this period which means I will have repay just over £30k.

I believe I'll be able to pay this amount of earlier than 60 months but have gone with the longer period to lower the monthly amount for now.

It now turns out I have had an offer for the same amount accepted from Liverpool Victoria bank but their interest rate is 6.8% which is almost 2% lower than Lloyds!! With Liverpool victoria I will pay £492 per month which saves me £38 a month over Lloyds.All I need to do is sign on the dotted line and post the form.

I'm trying to work out which loan to go for as I believe there is a possibility of me paying this loan off early (after 3years possibly). The Liverpool Victoria loan is quite straight forward to calculate any early repayments. In a nutshel they use rule of 78 to calculate their final repayment figure. In a nutshell I would be paying off more of the interest at the start of the loan than at the end.

My difficulty is calculating how much I would end up paying Lloyds back. Their only penalty seems to be two months interest (£185 approx). What I am trying to work out is after 3yrs payments what sort of settlement figure could I end up paying? Do I just calculate £25k - (£513 x 3yrs payments)?

Lloyds would charge me £30.5k if the loan were to run to full term whereas Liverpool would charge me £29K.

Which loan do I go for?
Lloyds who charge only 2 months early redemption fee and more over the full term or Liverpool Victoria where I would end up paying more interest for early redemption on effectively discouraging that route but offers me the chance to pay less over the full term?

Any help would be gladly appreciated.

Longshot

jonesMUFCforever

Before you do anything go into a LTSB branch and get a settlement figure. Compare off your CCA form how much you have been charged for Insurance with what you will get refunded.The refund is not pro rata!
If you signed the CCA form in branch you may not have cooling off period, other channels you may have up to 7 days to unravel the loan.
If you are still in'profit' after what I have told you above go ahead and do it.

Eric

CTT_2

I applied to a LLoyds tsb loan for 15,000 pounds stg and was quoted 7.9 percent. However I asked them to look at the interest rate again and came back with 6.1 percent.
Also when I have wanted to pay off a loan with them early I normally send them a payment and leave about £50 outstanding. They then calculate the early fee on that £50. only.
Perfectly legal.

Longshot_3

Thanks ejones999 & CTT.

I did sign my CCA on the bank premises. Reading the Lloyds blurb on the back it states the 60 day interest early redemption charge but if I apply to repay the loan back within 30 days of the initial transaction the charge will fall to just £1. The same clause applies if I apply to repay with 90 days of the agreement end . The idea of saving up and applying your idea CTT is appealing. It certainly makes the Lloyds loan more appealing than the Liverpool Victoria offering now.

If anyone knows how Lloyds calculate their settlement figure would be interesting though!

I have to say this is one the best money sites on the web offering loads of practical and honest advice.
Thanks once again

BrightonLad

hey, thanks for these posts. I have a friend who contacted me only today for advice, but reading what is here i may have to tell him something different...


He has a loan with Lloyds with 18 months to go. he is paying this off (and some credit cards) with a new lower rate loan from Liverpool Victoria which he has received. Lloyds have told him he will have to pay a £70 charge to pay early.

Would you recommend that he pay all but £50 off, then get a figure for early payment?? How can he make an overpayment if this is the case? Is the Early redemtion charge based on how much is remaining?

Your comments would be very much appreciated.

jonesMUFCforever

Longshot

I think that they charge daily interest on personal loans.
If you go into a branch and ask customer services they can show you up to date redemption figure on screen.
Eric

Debt_Free_Chick

I think - and I have no concrete evidence for this - that all personal loans use the Rule of 78. You could just phone Lloyds and ask them.

In addition to Rule of 78, some lenders charge for early payment and it's usually x months interest.

The flexible loans work like revolving credit arrngements or overdrafts. So the amount outstanding is the amount outstanding, IYSWIM.

BrightonLad

Debt_Free_Chick wrote:

I think - and I have no concrete evidence for this - that all personal loans use the Rule of 78. You could just phone Lloyds and ask them.

In addition to Rule of 78, some lenders charge for early payment and it's usually x months interest.

Hello debt_free_chick. I am not sure what the rule of 78 is. could you please explain?

cheers