We’d like to remind Forumites to please avoid political debate on the Forum.

This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

RBS LOAN (early settlement )

markyc100
markyc100 Posts: 1 Newbie
in Loans
Hi all,

I currently have a loan with RBS which I pay £220 a month off and have another 11 months left on the loan. I thought I would be good and pay the loan off early so I called the bank up and they said my settlement figure was £3480. I understand there might be say 1-2 months interest, but not nearly £900. Is there any way round this ? Some people mention paying nearly all the loan off and leaving say 1 payment. I'm confused. Any help would be appreciated.

Comments

  • Herzlos
    Herzlos Posts: 16,003 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    You can ask them how they calculate it, but it likely involves an early settlement fee of some sort.

    It took me about an hour to get info from HBOS about the same thing, in the end it was IIRC 60 days interest on the outstanding balance, so I paid it all off bar just over the monthly payment amount and just let it run out. I think it only saved me about £90 though.
  • antrobus
    antrobus Posts: 17,386 Forumite
    markyc100 wrote: »
    Hi all,

    I currently have a loan with RBS which I pay £220 a month off and have another 11 months left on the loan. I thought I would be good and pay the loan off early so I called the bank up and they said my settlement figure was £3480. I understand there might be say 1-2 months interest, but not nearly £900. ...

    See this discussion. A charge of 58 days worth of interest is permissable.
    https://www.rbs-communities.co.uk/t5/Borrowing/Early-loan-repayment-charge-contrary-to-Consumer-Credit-Act/td-p/5641
    markyc100 wrote: »
    ...Is there any way round this ? Some people mention paying nearly all the loan off and leaving say 1 payment. I'm confused. Any help would be appreciated.

    That's the way around it.
  • CrowCrow
    CrowCrow Posts: 1,030 Forumite
    Pay 99% of the loan off early. Next payment will be taken and any excess will be returned to you. You'll pay no penalties.
  • chambta
    chambta Posts: 2,770 Forumite
    Part of the Furniture Combo Breaker
    CrowCrow wrote: »
    Pay 99% of the loan off early. Next payment will be taken and any excess will be returned to you. You'll pay no penalties.

    You get the same 'penalty' applied to any overpayment, full or partial, so how does what you're proposing work?
  • Coveredinbees!!!!
    Coveredinbees!!!! Posts: 3,956 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Well some thing doesn't add up as if you carry on making 11 more payments of 220 that's only £2420, where do they get the extra grand from????
    Nothing to see here, move along.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351.7K Banking & Borrowing
  • 253.4K Reduce Debt & Boost Income
  • 454K Spending & Discounts
  • 244.7K Work, Benefits & Business
  • 600.2K Mortgages, Homes & Bills
  • 177.3K Life & Family
  • 258.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.2K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.
Update Your Picture