Early settlement of RBS loan

ellspacer

I have a loan with RBS with 20 months left to run. I pay £128.63 each month. I have a bit of money saved so I thought I would be best paying it off early. I rang for a settlement figure and was told it would be approx £2600 or the same as 20 payments plus 56 days interest.
Looking at last years statement on the loan I am paying about £18 per month interest, (reducing a few pence with every payment).It does not seem right that they can charge me interest for money I have repaid - anyone else encountered this?

MK55

Yes, you agreed to it when you took out the loan, it's to cover their costs. THey are there to make money.

Ring up and make a payment of everything but 1 last payments this will avoid some interest charges.

tonkinator

You can actually pay off just enough to leave less than your last payment amount, the less that gets taken with the last Direct Debit, the less you pay 58 days' interest on.

I had a nightmare trying to get info from Sainsbury's on how I could do this, but managed to get it to about £70 that had 58 days' worth of interest charged on it.

debtcutter

Unfortunately they can do it legally.

I think actual "early repayment penalties" were outlawed, but they were then allowed to charge 2 months interest, no more, now pretty much all of them do that.

Like the above said, pay off all but your last payment's amount, then let your next payment clear the loan.

derbyjo

I got an early settlement figure from Sainsbury's bank, which included 58 days interest. I said I was considering reducing the loan, by paying off all but a small amount. I was told I couldn't do that, that if I don't pay the full amount off the rest of the interest will still accrue. It didn't sound right, but I want to try and pay off as little as possible but clear the debt as quickly as possible. The info with the annual statement says I can either get a settlement figure, or partly pay the loan by telling them I'm doing that. Can anyone tell me what Sainsbury's can take from me?

ch3101

derbyjo wrote: »

I got an early settlement figure from Sainsbury's bank, which included 58 days interest. I said I was considering reducing the loan, by paying off all but a small amount. I was told I couldn't do that, that if I don't pay the full amount off the rest of the interest will still accrue. It didn't sound right, but I want to try and pay off as little as possible but clear the debt as quickly as possible. The info with the annual statement says I can either get a settlement figure, or partly pay the loan by telling them I'm doing that. Can anyone tell me what Sainsbury's can take from me?

You'll most likely have to leave 2 months worth on the loan but you should be able to do that if the credit agreement says so.

Phone them and just say you want to make an overpayment as before they may have been trying to persuede you to just pay it all off.

ellspacer

Thank you for replies, decided not to pay any off and to continue with monthly payments - going on holiday instead.