working out how to end loan

MK55

Hi Guys,

Have a loan currently and can now pay this off. I currently owe 3.3k left on the loan. It says in my T&C;
'58 days interest on the amount repaid early'

I am unsure how to calculate this the loan APR is 23.5% and i took it out 2012 for 3 years.

How do i find out what is best whether to pay the loan in full all off, or pay it so there is still a few payments left, what do you guys think?

Cheers.

jonesMUFCforever

Ask them what is owing pay that amount off then let the last payment go through as normal by D/D.

MK55

Hi Thanks for reply, would you clarify a little more for me?

If i pay what i owe then there will be no DD left? Would it be more likely to ask what is outstanding - 1x DD payment then let the last one go out

jonesMUFCforever

An outstanding balance is not a settlement figure. To start with there will be interest from date of last payment until you pay the outstanding amount.
Let the last d/d go through even if it puts the loan in credit.They will refund you.
If you ask for a settlement figure they will add 2 months interest.

MK55

oh ok thats great thank you very much, first time i've ever done this, took the loan with limited credit history so want to get rid asap with the hefty interest!

So i should contact my lender and if for example the last payment is £150 on May 15th should i pay the outstanding amount at 3k and just let the last DD payment tick over and request a refund after?

Thanks again

DevCoder

1. Ask for a settlement amount, lets say you get 3K
2. Pay all but 1 monthly payment, so if your monthly payments are £200 then pay £2,800
3. Let the DD pay of the final £200, youll get charges 58 days interest (at worst) on 200 and not on £3K.

MK55

perfect, thanks very much will let you know how it goes tomorrow

DevCoder

Im fairly sure Im right in saying the 2.8K is an overpayment and the final £200 is the early finalised payment which is what they will charge you on.

Hopefully others will back this up as my brain is a bit dead right now, working out basle 3 liquidity for a bank and then coming home to ipad/android development and a glass of red or two is not helping

MK55

haha no probs well i am going to ring the bank tomorrow and ask if i pay X amount short howmany payments are left etc. i will find out any issues and i'll come back to all of you tomorrow

thanks again guys £1100 interest saved in the longrun!!!

SeanG79

I may be wrong but I am fairly certain the 58 days penalty will be applied to overpayments as well as early settlement, in which case it makes no difference whether you settle in full or leave the last DD to go through. You will need to confirm this via your T&C's or asking the lender.

jonesMUFCforever

SeanG79 wrote: »

I may be wrong but I am fairly certain the 58 days penalty will be applied to overpayments as well as early settlement, in which case it makes no difference whether you settle in full or leave the last DD to go through. You will need to confirm this via your T&C's or asking the lender.

In my experience you are wrong here.