Loan Closure advice

psonger

I have a loan with the TSB that I have come into the funds to clear early.

I am allowed to make additional payments and using the additional payment calculator if i made an additional payment of the balance it would pay the loan ie:




Option A

Additional payments calculator

Take a look at the effect on the interest you’ll pay and the number of repayments you’ll have outstanding if you make an additional payment on your loan.

Amount: (min £10.00)£ 698.86
Calculate
New balance:£0.00

Repayments remaining:0 months

Repayments reduced by:12 months

Interest you’ll save:£102.00

However the confusing part is that to close the loan I am told to use the closure quote which gives a considerably higher figure.

Option B

Amount outstanding (including interest due to the end of your loan) [?] £802.33
Early settlement rebate [?] £64.56
Total amount to settle your loan (amount outstanding less early settlement rebate) [?] £737.77

What happens if i do option A? Would they charge me the extra in option B or is option B just a silly bad deal they hope I would take. If I paid all but a tiny amount on option A what would happen to option B?

I am very confused.

poggs

TSB are a bit sneaky with loan settlements. They load on 54 days interest (ish + a fee) for an early settlement.

Pay in a sum that leaves the last 2 payment amounts remaining less about a fiver to cover any minute interest. Tsb will not reduce your payments but take the usual amount out which will zero the loan and force closure. Then you dont get stung with the fees and interest.

It does then take 2 months to close but you save some cash.

If you want the peace of mind to close it now, pay the extra fees.

psonger

Sounds like a solid plan to me, thanks for your help.

:beer: