Should I pay a settlement figure?

Not_a_very_savvy_shopper.

I recently phoned a loan company I have a debt with to get an idea of the amount I still owed them. They have sent me a letter stating an outstanding balance, a rebate amount and a settlement figure. The settlement figure was considerably lower than the outstanding balance, so I did a Google search to check out exactly what a settlement figure was, and now I'm quite concerned! If I pay the settlement figure,will I get a bad credit rating, even though I have tried to pay the loan off early? Should I try to renegotiate a monthly payment to pay off the full outstanding balance to avoid a bad credit score? I noticed some websites stating that you need to supply all sorts of information to get loan companies to agree to full & final settlements, but I didn't provide any information at all about my current financial circumstances. Is what I've received different to a full & final settlement agreement?! Any advice would be great as I'm very confused!

[Deleted User]

A settlement figure is fine.

A full and final settlement is different and involves defaulting and settling for less than you owe.

Thrugelmir

Not_a_very_savvy_shopper. wrote: »

The settlement figure was considerably lower than the outstanding balance,

Correct. As you are repaying the debt earlier. You won't incur and be charged as much interest. The longer period you borrow money over you the more you'll end up paying back.

sourcrates

Hi,


Saw your post on the stepchange thread, glad you posted here as well.
Basically if you have a fixed term credit agreement, such as a loan, and you want to settle this early, that's absolutely fine, you ask the lender for a "settlement figure", this will usually be a sum smaller than what is actually still owed on the account, as a refund of interest, that you wont be now paying, will be deducted from it.


It will show as settled on your credit file, with no negative impact at all.


A "full and final settlement" is slightly different, and applies to debts that have been long since defaulted, passed around debt collection agencies, and eventually settled for an amount less than is owed, to clear the debt quickly.


Hope that puts your mind at rest.