Financial advice on loans.

Grantyone

Hello all.

I am new to this site and would like to see if there is any expert advice out there for me

I plan to pay off one loan and one finance agreement I have when I installed new doors and windows last year.


The settlement figure for my loan is £3640, however the outstanding balance is £3490.

The settlement quote for the windows is £7000.

I am keen to keep settlement charges to the bear minimum.

What's my best option? Would paying £3000 to my loan and then request a settlement figure be beneficial? My agreement suggests there is a fee for partial settlement. Technically this is what I would be doing but can it not also be classed as a simple overpayment? Is this the same?

Additionally, I thought about paying 5 or 6k to the windows and then see what the settlement would be after that.

The interest rate for the loan is high at 20.9% the windows is significantly lower at 4.9%

As I say, I am keen to pay these off but I want to save a bit in the process.

Any help/advice us greatly appreciated.

Regards

Grant

ConsumerWizkid

Welcome

What settlement fee's are there? Are you choosing between paying either the £3640 or £3k towards the windows? Or can you pay both at once in full? It's not clear what options you are considering.

If you can settle both whilst just paying £200 to the non window loan as a fee then I'd go for it personally.

CLAPTON

pay the debt with the highest APR off first

Grantyone

Thanks for the reply.

When I phoned RBS for settlement figure on non window loan they advised it was 58 days interest and a settlement charge which made up the settlement quote.

Not sure what makes up the window loan settlement fee but my quote is £7000.

I am in a position to pay both in full but was wondering if there were other options to try and save a bit on early settlement fees.

I read somewhere I could pay 3k into RBS loan account which would leave the balance sitting at the few hundred pound. then pay the remaining balance in the account for the last few direct debits to clear balance?

Similarly, I was wondering if I paid £5k towards the windows loan, if the settlement quote would then be less than 2k. By this I mean I would pay less than the 7k being quoted now.

Hope this is clearer?

Thank you again for your help.

Tixy

For some loans it can work to make a large overpayment/one off payment/partial settlement to bring down the balance then waiting a month to pay off the remaining balance (or paying off the final amount by the regular DD).

However if your lender charges a fee for overpayments (which they are entitled to do so) then you usually don't save much and sometimes would cost more.

You'd need to establish what the fees are for overpayments and then calculate the cost of the alternative options (or ask someone on here to do so for you - we'd need all the relevant numbers/APR etc).

Grantyone

If that is possible then great. It would be so helpful.

My windows loan settlement figure is £7004. I pay £105 per month and it's over eight years. The first payment only started last month.

The APR for this 4.9%

My RBS loan has an o/s balance of £3490 and a settlement quote of£3630 or thereabouts.

I have four years remaining at also £105 per month.

The APR of this is 20.9%

My RBS documents suggest a partial repayment charge but doesn't say how much
Thank you

Grantyone

I'm not sure if this is relevant but hitachi who I have my window finance with say if I credit £5000 towards it my DD would stop until the credit 'runs out'

It does seen to suggest however if I request partial repayment then this is different?

InsideInsurance

Grantyone wrote: »

My agreement suggests there is a fee for partial settlement. Technically this is what I would be doing but can it not also be classed as a simple overpayment?

The outstanding balance you have been given is just the outstanding capital you have left on the loan, it doesnt reflect all the additional interest you'd have to pay if you continued with the normal payment plan.

Many loans charge 1-3 months interest as a charge for settling early but evidently you save the interest you'd have to pay if you you were to continue paying it monthly over the next X years.

One trick can be to almost pay it off in full, when you do this they normally give you the choice of either reducing the term or reducing the monthly amount and thus interest. Do the second and early settle the following month. You still pay the 2 months additional interest but that interest figure is now much lower.

Tixy

Grantyone wrote: »

My RBS documents suggest a partial repayment charge but doesn't say how much
Thank you

You need to ask them if a partial repayment charge will be levied for a partial repayment of the debt and if so what amount or % this would be.
Without knowing that you cannot work out if it is cheaper to just pay the standard 58days interest to settle in full or whether to pay nearly all and be charged the fee for a partial overpayment.

Grantyone

Thank you for all the replies.

I think I will make a large overpayment on the loan and settle it the following month.

With regards the windows I reckon I may just bite the bullet and settle the 7k. That's certainly a fair bit cheaper than £105pm for the next 8 years.