loan repayments

fishy3

My partner and I need to take out a short term £20,000 loan, which we should be able to repay in full in about 2 months. The 'loans' man at lloyds TSB explained to us that there are heavy fines for repaying a loan early- but he said a way round this is to pay off all but £5 of the loan in a lump sum (no fees involved)- then you just make the repayments (and therefore interrest payments) on this small amount untill the term of the loan finish.
Can this be correct?

Any advise would be appreciated...

natweststaffmember

It is something the banks do not want you to know. You can pay lump sums of your loan but it will not reduce the monthly payment but will reduce the term of the loan. That is correct what he said but maybe he should not have let the cat out of the bag