Repayment of personal loan early

Si_Saving

Hi,

New to the forums, hopefully this is in the right area if not please move.

Well i'm looking to pay off my personal loan in full in January, it's approx £14,600 showing on my statement however i've asked for a final settlement figure today and it's approx £15,400 if i pay within the next 30 days, i know the figure will change by January, hopefully a lesser figure!
So is there a more sensible way of paying off the loan rather than the final settlement for example paying off large chunks each month to save even a few pounds?

Thanks in advance

Tixy

That seems high - its usually 2 months interest added for paying off early. But I assume that you are not paying £400 interest a month.

What does your loan agreement say about early settlement and also about additional payments?
If you can make lump sum overpayments (with no penalty) then it can be better to pay off almost all and leave a balance equivalent to a single payment to be collected by DD.

Si_Saving

Thanks for the quick reply Tixy, i'll read through my loan agreement and see what the penalties are.

Hopefully i can find away from paying so much extra, £800 does seem in excess.

Si_Saving

Well the small print says

i have the right to repay the credit at any time in full or partially.

An early repayment fee will be payable , The fee will be equal to 58 days' interest at the annual rate of interest. Calculated on a daily basis where the loan is repaid early, on the amount of the outstanding balance of the loan which is repaid ahead of the due date.

So how do i work out a days' interest? The loan was over 53 months, total interest £5,965.76 at fixed rate of 12.18%. I'm 16 months into the loan this month.

I've had a best guess with my interest workings out to be £112.56 a month, and guessing that 58 days equates close to 2 months £225 approx ???
The difference on my final settlement figure and my current statement is £773.85. Have i worked this out wrong or has the bank?

Any help would be great, I will of course speak to the bank in the morning and ask them to explain how it's worked out.

Thanks

Tixy

£20k original loan?

Putting the figures in to an online calculator (http://www.theguardian.com/money/loan-repayment-calculator-interest-rates) suggests that after 16months your capital balance would be £15,045 and interest would be around £150 this month, so £300 for 2 months.

So to me it looks like the statement balance is at odds with the loan agreement, rather than the settlement balance being high.

I think you will need to query it with the bank.

Si_Saving

Thanks for the reply, Yes £20K
I have been on that calculator, only about £1.60 out so almost spot on.
My error is that i have paid 17 months not 16!
So as of today i have paid the 17th month and my online statement shows £14,653.46 and the bank quoted me via the phone today £15,427.31 final settlement figure.
£300 sound about right to me but £773 seems way too high, unless they have some hidden fees?

Tixy

I wonder if somehow they were quoting as though the latest payment hadn't yet been made?

Seems odd if you statement shows that it has, but would possibly explain the difference?

Si_Saving

Well that could be an issue, either way i'd like to find out if paying it off the way you have described - main bulk of it less a D/D will save me some cash?