Do your HSBC monthly payments reduce with an HSBC overpayment?

leestafford

I currently pay £215.24 a month for an HSBC loan.

I've read on their website and forums that I'm entitled to make overpayments.

Say I pay a lump sum off, just say £1000 for example.

would my monthly payments reduce in amount? Or would I just pay the same but for less time

Amount Outstanding £ 10546.76 with 48 payments left.
Original loan was £10,250 - with interest is came to Total payable GBP: 12,914.71 - rate APR 9.9%

Also, if anyone knows how to make HSBC overpayments, please let me know!

Thank you in advance.

pd52

Monthly payments stay the same, but the term of the loan will reduce.

nyermen

I've had a couple of loans with HSBC, and the terms have varied with regards to how to overpay / repay / penalties for doing so / etc, so if you still have the loan agreement, it's worth checking it for the full details.

Looking at my last agreement (dated May 2012), it notes the paragraph below, but it could well be different for you, but I suspect the early payment method is the same.

(Item 12 - Early Settlement)
You are entitled to repay amounts due under this agreement partially or in full at any time by giving us notice. You can give us notice in writing to (My branch address - note not the branch I applied at, the one for my sort code) or by calling us on (the 08457 number, has it changed?). It is necessary to pay all amounts owed under the Agreement if you wish to terminate the Agreement. We are entitled to defer the early repayment date by up to 28 days and to make a charge equivalent of one month interest on the amount of the early repayment.

Best Wishes,

Peter.

justme_75

I looked into the same thing a few months ago. Speaking to HSBC they advised just to set it up as a transfer directly into the account.

However, as it just reduces the length of the loan I decided to go about it differently.

I was going to overpay the loan by £300 a month. Instead, I've got a Regular Saver account setup at 6% interest, into which I pay the £300. I'll keep saving in this way until I have the amount to settle the loan. That way, I'm making a little extra on the money and still ending it around the same time as i would it I overpaid it directly.

Thrugelmir

Interest will be calculated daily on the balance outstanding and charged monthly. So the sooner you make overpayments the more benefit you will receive.

As the repayments constitute a contractual term. They won't reduce as you make overpayments. The benefit is totally back loaded in that you'll settle the loan earlier.

jonesMUFCforever

You have a savings rate of 6% (4.8 net?) what is the APR of your loan?
Whichever is the highest should enable you to make the right decision.

justme_75

Yes, admittedly, mine is a 4% APR loan so probably not much use to OP