Early repayment on NatWest loan

neuromancer

Hi,

Just wondered if anyone has experience of making early payments to a NatWest personal loan (taken out in late 2011)? I'm in a position where I can pay back around 40% of the outstanding balance in cash, but I was wondering whether doing so will A) reduce my monthly repayments with the same number of months remaining, or keep the same monthly repayments but reduce the outstanding term so it gets paid off quicker?

It might vary from bank to bank... The website isn't particularly helpful and getting through to them on the phone is hard work. I'm trying to do the maths to figure out whether I should repay some of it early, transfer the loan, keep saving until I can pay the whole lot off, or a mixture of the above... Tips welcome!

Also; I've seen mention of people (I believe HSBC customers) who were refunded part of their interest for being 'good customers' when they finally finished paying off their loan. Is that standard practice or is it specific to one bank, or a particular deal?

Thanks!

Tixy

For a loan taken out in 2011 whether you can make a partial early repayment will be listed in the original T&Cs/credit agreement.

Most banks by default will keep the repayments the same but the term will reduced. Some allow customers the option to reschedule payments so that the monthly repayments reduce but the term remains the same.

If they do allow partial repayments then your interest will be recalculated so you pay less interest than you otherwise would have.

HSBC did have a particular loan product which had an proportion interest repaid at the end if all payments made on time.

20aday

neuromancer wrote: »

Hi,

Just wondered if anyone has experience of making early payments to a NatWest personal loan (taken out in late 2011)? I'm in a position where I can pay back around 40% of the outstanding balance in cash, but I was wondering whether doing so will A) reduce my monthly repayments with the same number of months remaining, or keep the same monthly repayments but reduce the outstanding term so it gets paid off quicker?

It might vary from bank to bank... The website isn't particularly helpful and getting through to them on the phone is hard work. I'm trying to do the maths to figure out whether I should repay some of it early, transfer the loan, keep saving until I can pay the whole lot off, or a mixture of the above... Tips welcome!

Also; I've seen mention of people (I believe HSBC customers) who were refunded part of their interest for being 'good customers' when they finally finished paying off their loan. Is that standard practice or is it specific to one bank, or a particular deal?

Thanks!

I've found this on their website (after I reduced the brightness on my screen, they sure like purple at NatWest!):

You can make over-payments at any time and this could shorten your loan term.
For loans applied for from 15 November 2010 we charge 58 days interest (28 days if loan term 12 months or less, or the remaining number of days interest if there are less than 58 days (or 28 days) left in the loan term) on the amount by which your outstanding balance is reduced.

HTH

neuromancer

Bah! I was hoping that it would reduce the repayments, so I could then take that extra money to bulk up the savings, then repay the rest of the loan in one go a little later down the line. Thanks for the replies though!

chambta

You have a choice of either reduced payments or a shortened term.

There's an option on the system to quote either and depending what you want to do it needs keyed in a particular way.