Settle early - yay or nay?

DD265

Could somebody check or help me do the maths on this one please?

I have the opportunity to pay off my loan in full. I have a loan with Lloyds, originally for £5,000, which I took out on 15 Oct 2011 with a term of 48 months. During that time I have taken one repayment holiday (April 2012). The APR is 9.9%.

On my internet banking, it says:

Amount outstanding (including interest due to the end of your loan) [?] £1206.00
Early settlement rebate [?] £32.04
Total amount to settle your loan (amount outstanding less early settlement rebate) [?] £1173.96

Your early settlement rebate has been calculated in line with the Consumer Credit (Early Settlement) Regulation 2004, and is shown as a reduction in the interest due and taking this rebate into account we, in effect, charge up to 58 days’ interest.

My current balance shown is £1,156.31.

Currently I make the monthly payment of £125.66 (that has been the figure since the outset) and an additional monthly payment of £225. In February I was also able to pay an extra £500 on top of that.

Basically, if I settle early, am I actually getting a good deal? Should I continue at the current rate of repayment? Should I make higher repayments but not pay it all off in one go? As much as it will be nice to get it gone, I don't want to get shafted either!

[Deleted User]

The advice I was given (by a bank manager of all people), is to pay everything bar one months payment, and let the regular DD make the final payment.

I don't fully understand it, but it has something to do with avoiding an early settlement penalty.

DD265

I shouldn't have an early settlement penalty - it was one thing I was smart enough to specify when I took it out as I always intended to pay it off early. I don't quite understand the bit about 58 days interest though but it still looks as though I'm saving a bit.

Just double checking the Snowball calculator but I think I might just hit the button tonight.

nikhil3008

Dear people
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