Paying £3000 Loan back within 3 days

FreddyMac

Love the forum and thanks guys for any advice you can offer.

Thankfully this is not regarding myself but my wife's sister. She decided to get a £3000 loan to consolidate some debts. She only told us tonight but she hasn't missed payments its just the amounts are stacking and getting hard to manage. Hence the Loan.

If i had known i would have given her the £3000 in cash as we are able to help her from our savings. She sent over her contract it was with Nationwide her bank and there are no early repayment fees.

1) What affect will it have on her credit file if i pay the loan in full off after only 3 days? Is this positive or negative?
2) Are there any adverse things we should look out for?

longtermplanner

1) her credit record will show the loan as having been repaid in full with no defaults. Definitely not negative.

2) Double check the repayment amount. After all, you don't want to leave her owing £3.87 in interest and get a default notice for it!

FreddyMac

longtermplanner wrote: »

1) her credit record will show the loan as having been repaid in full with no defaults. Definitely not negative.

2) Double check the repayment amount. After all, you don't want to leave her owing £3.87 in interest and get a default notice for it!

It sort of seems strange because then what is stopping people to build credit to just keep applying and paying off loans instantly?

Anyway thanks for the heads up will double triple check this! Should i get the bank to confirm in writing the debt is cleared?

CLAPTON

FreddyMac wrote: »

It sort of seems strange because then what is stopping people to build credit to just keep applying and paying off loans instantly?

Anyway thanks for the heads up will double triple check this! Should i get the bank to confirm in writing the debt is cleared?

What possible advantage would such a stupid strategy provide?

One 'needs' good credit history if one needs credit; if one doesn't need credit then it is useless.

Why would any sane person deliberately pay banks interest when they don't need too?

murmeltier

Your sister will have a right of withdrawal under the consumer credit act within 14 days of taking out the loan. If she withdraws, she will have to pay back all monies plus interest for a few days, but the upside of it is that the lender is obliged to rewind the entire loan "as if it had never been taken out" (I forget the exact wording). This includes wiping the credit file clean (either remove entirely or show as fully settled).


There are no penalties or other fees to pay and no reason needs to be given for exercising the right of withdrawal, it just needs to happen within 14 days of taking out the loan. Once notice has been given, you have 30 days to repay.


The loan agreement should mention this right and who to contact to exercise.


See here: http://www.which.co.uk/consumer-rights/regulation/consumer-credit-act

dealer_wins

I would advise you to only lend your wife's sister the £3000 "IF" you would be happy to gift it to her.

That way if she repays you its great, if not you always expected that and feel happy to help her out from your savings.

IMO the likelihood of her repaying you is low, as people who tend to take out loan after loan live beyond their means and fail to repay what they borrow.