Picture loans

MarkG17

Hi

I got a loan off Picture 9 years ago and I'm now in a position to pay it off. I have rang them for a settlement figure and I'm surprised how much I still owe them.

Is there any way I can get the figure down, I've heard that some companies except a final settlement figure

Thank you

Gaz83

MarkG17 wrote: »

Hi

I got a loan off Picture 9 years ago and I'm now in a position to pay it off. I have rang them for a settlement figure and I'm surprised how much I still owe them.

Is there any way I can get the figure down, I've heard that some companies except a final settlement figure

Thank you

Is it a secured or unsecured loan?

MarkG17

Hi

It's a secured loan

Gaz83

Okay. Two things:

Firstly: companies will usually only accept a reduced full and final settlement if there is a history of defaulting / missed payments, as they may think that it's their only chance of getting any money back from the person owing them money. Do you have a history of defaulting / missed payments? Even so, this usually happens only on unsecured loans.

Secondly: companies don't usually accept reduced full and final settlements on secured loans as they have a charge on your property and can sit tight and wait / force the owner to sell to release the equity in the property and get their money back that way.

So I don't think there's any chance they'd accept a lesser offer.

Foxy-Stoat_3

How much was the original loan, term and monthly payments and what was the settlement figure?

zxspeccy

I would imagine this is a relatively long term loan seeing as it is secured, and if this is the case then a settlement figure after only 1 year is going to be high. The repayments made over the last 12 months probably haven’t made much of a dent into the principle loan amount.

In additional as the loan is probably fully covered by the security on offer, the loan company are unlikely to be willing to negotiate on a settlement price, as they can still get their money by realising the security.

Loan companies don’t like their customer paying off secured loans early as this will stop any future interest (and potential profit) for them.

As other have said on here, let us know the full amount of the original loan, term, APR and settlement figure and maybe you might get some more specific advice. Also check the T&C of the loan to see if there is any penalty for early repayment which may explain the high settlement figure.

Gaz83

zxspeccy wrote: »

I would imagine this is a relatively long term loan seeing as it is secured, and if this is the case then a settlement figure after only 1 year is going to be high. The repayments made over the last 12 months probably haven’t made much of a dent into the principle loan amount.

In additional as the loan is probably fully covered by the security on offer, the loan company are unlikely to be willing to negotiate on a settlement price, as they can still get their money by realising the security.

Loan companies don’t like their customer paying off secured loans early as this will stop any future interest (and potential profit) for them.

As other have said on here, let us know the full amount of the original loan, term, APR and settlement figure and maybe you might get some more specific advice. Also check the T&C of the loan to see if there is any penalty for early repayment which may explain the high settlement figure.

He's had it for 9 years, not 1.

MarkG17

The original loan was for 47,000 been paying for 9 years. I've never missed or been late with a payment. They saying the settlement figure is 37,000.
I can pay it all off no problem but I'm just seeing if I can save any money.

There is £150 early settlement fee

thanks

Gaz83

MarkG17 wrote: »

The original loan was for 47,000 been paying for 9 years. I've never missed or been late with a payment. They saying the settlement figure is 37,000.
I can pay it all off no problem but I'm just seeing if I can save any money.

There is £150 early settlement fee

thanks

The short answer is no, you can't save any money. You agreed to their terms and conditions when you took the loan out.

What's the APR and how much have you been paying a month?

MarkG17

Been paying £406 a month not sure of the Apr

nyermen

There's most of the factors needed to do a rough calculation, as I assume it's "Constant Principal and Interest Annuity" (meaning you pay a fixed sum each month).

If you know the loan period as well, that would be enough to guess the APR as it's the only remaining parameter.
However, doing a few very rough maths in excel (ignoring periodicity etc) and then playing with the rate, the only way I can get from 47,000 to 37,000 in 9 years with that repayment per month, is to assume a rate of around 9%, which seems high for secured debt. Perhaps there is insurance in there (PPI etc). It also means its a roughly 22 years loan?

If it is about 22 years, and about 9%, then the settlement figure would be about right. If not, then. Of course, I may have made a mistake - I'm a newbie on the forums, but I do work in this area - Financial Asset & Liability management for a software company)

To add - on my guess maths - At the beginning of the loan, as a fixed payment, roughly only £57 is going to repay, the rest of the £406 is interest. At end of year 9, it's £267 interest, £139 principal repayment. They won't become par (203/203) until about year 14. It's the nature of the calculation.

Peter.