Early Repayment

MrsJT_2

Hi All,

We have the money to pay a couple of loans off early, I have been reading the forums and read that if we pay all of the balance less the monthly DD amount and then ask for a settlement figure that we will only pay the early settlement interest on the remaining balance, is this correct?

Any advice would be appreciated as we want to pay as little out as possible but clear everything off.

Thank you.......

MrsJT_2

Is anyone aware of this method of paying loans off? Any help is very much appreciated......:huh:

NYGiants

Yes that is correct

CLAPTON

well no not exactly


the argument is that overpayment do not attract any charge whilst full early repayment does.

this may or may not be true for your loan; maybe consider what the T&Cs say.


however if it is true then simply pay everything bar the last monthly amount and let the DD terminate the loan.

randomnut

I can confirm that does method does work fine. However:

- Do NOT ask for as settlement figure first, as it stays valid for a while and any overpayment goes against this. You need to make an overpayment, and THEN ask them for details about remaining amount.
- DO check your T&Cs. Whilst new loans after a specific time are by law allowed overpayments , I can't remember the date so do check.

So in summary if you can do overpayments, chuck in an overpayment and then ask them about the remaining amount afterwards. Personally I did balance - £10, then paid the £10 afterwards and only paid interest on that.

Ironically when speaking to the bank about if that would work, they would 'neither confirm nor deny if it is a valid option'.... They obviously hate people doing it!

fart

Basically if you owe £10k for example, and have saved up £10k so can pay off in full, write to them and ask them for a settlement figure to be paid off in a lump sum. They might come back with like £8,500 or something.

I ignored Halifax for years and years and i was technically homeless, jobless and penniless. They hounded me for ages through their various debt collection agencies. Once each one figured out they wouldn't get anything, and they'd all bounced the debt back to Halifax, Halifax sent me an offer of early repayment (LOL) in the amount of £2400, for a £4900 debt. Ripped it up, threw it in the bin and have heard nothing since. But this can work both ways - you can ask them for a settlement too.

sistafromanothermista

MrsJT wrote: »

Hi All,

We have the money to pay a couple of loans off early, I have been reading the forums and read that if we pay all of the balance less the monthly DD amount and then ask for a settlement figure that we will only pay the early settlement interest on the remaining balance, is this correct?

Any advice would be appreciated as we want to pay as little out as possible but clear everything off.

Thank you.......

If you have the money, why are you trying for a F&F???
You owe the total amount don't you?

fart

sistafromanothermista wrote: »

If you have the money, why are you trying for a F&F???
You owe the total amount don't you?

Why pay the total amount when you can pay much less?

Tixy

sistafromanothermista wrote: »

If you have the money, why are you trying for a F&F???
You owe the total amount don't you?

The OP isn't suggesting a reduced full & final settlement, as in trying to paying off less than the capital outstanding.
They are just wanting to minimise the additional interest due on early settlement, whether it will make a difference will depend on the T&Cs of their loan.

StuC75

The OP is looking for Early Settlement rather than a Full & Final (Partial Settlement).

When paying Early Settlement on a Loan there is a refund of the Interest that would have been charged had the loan ran its normal course. Often there is a 'penalty' of 2 months interest on any over payment.

Having paid off a tesco loan early last week (1 year into 10 year term), I can confirm that its a bit of a myth regarding the paying a lump amount early as opposed to getting the official early repayment and paying by that.

Why do I say that?

Well when paying the manual amount, they then add a interest refund to the account - but this amount is already less the 56 days penalty - i.e. I paid 9k manually and received a £2.6k (ish credit) then leaving an amount similar to monthly payment to pay off to clear.

Back in June when I asked for the official settlement (which would include such charges and was only valid for a month). The Difference between that amount and what I have since paid in terms of the monthly Direct Debits (July & August) and Faster Payments last week is exactly £3.23 (which is likely just the interest penalty on the final amount left)..

So it is a Myth...

12th June = £9,404.53 Valid for 30 days

Payments Made since:-
· 12th June = Manual Payment £100
· 5th July = Direct Debit £110.22
· 5th August = Direct Debit £110.22
· 7th August = Manual Payment £5,000
· 8th August = Manual Payment £4,000
· 9th August = Debit Card £80.86
· TOTAL PAYMENTS SINCE 12th June = £9,401.30

Difference to the 12th June redemption figure : £3.23

MrsJT_2

Thank you all for your replies, we have £6,431.40 showing as remaining on one loan and -£1,735.40 showing as remaining for the other.

I made the mistake of asking Natwest (smaller loan) for a settlement figure and they came back with £1901.64

I realy don't understand how any of this really works, how much is the settlement figure likely to be on the £6,431.40 loan with Lloyds anyone have any idea?

Thank you again :beer: