what's this mean....

confused55

Currently have a loan with Santander and a few credit cards and an overdraft. Applied for a loan from Clydesdale bank to cover them all, which they've accepted but at a horrible interest rate. Now my credit history is fine, with no defaults etc. so the reason I'm getting spanked on the interest rate is because I'm up to my limit on all my lines of credit. So my idea is to take the loan, settle the Santander loan, and pay off the overdraft and the credit cards and then in about 4 months I should have a very good credit history file....

My question is that in the smallprint for the Clydesdale bank loan it says this...

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Early repayment.
The loan can be repaid early or in part at any time. if the loan is repaid early in full, all amounts due under this loan will become payable on the date you settle the loan. If you do repay early in part or in full you will have a right to a rebate under the Consumer credit act 1974 which we will calculate in accordance with the terms of that act (this means we are allowed to claim additional interest when we calculate the rebate). To repay the loan early in full, or in part, you should notify us in writing, in person or by calling us.

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Does this mean that I would have to pay more than the original capital of the loan? The loan is for 11,000 - and obviously over the 7 years of the loan I'll pay a lot more than 11,000. But the idea was to repay after 4 to 6 months with a new loan, which will hopefully be at a sensible APR since I'll owe no money except to Clydesdale.

Can anyone tell me what they're saying?

_Andy_

Have you rung them and asked?

confused55

_Andy_ wrote: »

Have you rung them and asked?

It's a Sunday so I can't - only got the paperwork printed late yesterday and am going to ring them tomorrow, but hoped someone here could give me an idea right now.

Apples2

Of course you will repay more than the capital. You can't expect to borrow £11k and repay less than £11k.

It all means you will have to ask for a settlement figure when you repay early. It will include a couple of months interest but not ALL the interest which would have been paid over the whole term of the loan.

You're being very optimistic if you think you will get another equivalent loan in 6 months with a great APR. In all reality you will be stuck with this one for the whole term.

confused55

Apples2 wrote: »

Of course you will repay more than the capital. You can't expect to borrow £11k and repay less than £11k.

It all means you will have to ask for a settlement figure when you repay early. It will include a couple of months interest but not ALL the interest which would have been paid over the whole term of the loan.

You're being very optimistic if you think you will get another equivalent loan in 6 months with a great APR. In all reality you will be stuck with this one for the whole term.

What I meant was would I have to pay significantly more than 11,000 in 6 months. I know that obviously the payments I make in 6 months + the settlement figure will be above 11,000. It's just the smallprint made it sound like I would have to pay the full amount irrespective of whether I paid in 6 months or over 7 years.

I can't see why the APR shouldn't come down. My credit rating is only negatively affected by the fact I'm maxed out on all my lines of credit. With no further applications for credit and debts settled and cards at sensible amounts and my bank account in the black I should be able to get a BETTER APR. Maybe not the best, but better than now. Perhaps not in 6 months, but in 12 months.

CLAPTON

whether you get another loan to then pay off the 11k will depend upon your income

if your were looking for a 11k loan to pay off the Santander loan then a potential lender would see you with a 22k loan exposure and would be looking for you to have an income of round £44K

jonesMUFCforever

I take the statement to mean that OP will be subject to an early settlement fee if settling early which will be added to capital and interest outstanding since last repayment.