HSBC Loan overpayments

justme_75

Hi,

Sorry if this is a simple question ...

I have an HSBC loan and want to start making monthly overpayments on it. This amount will vary month to month.

Do I simply do this by setting up my loan account as a payee from my First Direct current account and overpay it as and when, or, do I need to contact HSBC to do it?

If I just make the 'ad hoc' payments, how does HSBC re-calculate my loan term, amount outstanding etc.?

Thanks!

thebritishbloke

I can't find the information exactly with overpayments, I can only find it in terms of an early settlement.

I'd call them just to make sure, as sometimes you have to make the overpayment with the direct debit, but you should be able to just send it directly to the account.

It's recalculated based on how much you still owe, your monthly repayment stays the same so they calculate how soon you would pay it off including interest etc. You won't get an interest "rebate" but you will save interest in the long term.

Thrugelmir

justme_75 wrote: »

If I just make the 'ad hoc' payments, how does HSBC re-calculate my loan term, amount outstanding etc.?

Thanks!

HSBC won't. You'll simply shorten the term by making overpayments and be be charged less interest in the process. The terms are contractual on both parties. So cannot simply be amended by either party on a whim.

justme_75

Thanks both.

Have now rung them which I should probably have just done in the first place (even the advisor had to go off and check) and, yep, I just make bill payments from my current account to my loan account.

Once the loan is paid in full, the overpayment of interest (due to the shorter term) will be re-calcuated and refunded.

Time to get overpaying

problemcashback

just to add in case anyone comes across this in the future, not all hsbc loans allow over payments so check with them before trying to make overpayments.