Lloyds - limit on overpayment

markpearce1974

Hi All,

Was looking for some advice on the loan I have with Lloyds....

I phoned them yesterday and they told me that I could only make an overpayment of upto 80% of the outstanding balance - anything more than that would be treated as early settlement and a penalty would apply.... Doesn't seem right to me as I should be able an overpayment of up to £8k without penalty.

What in essence I was looking to do was pay most of the outstanding balance and leave £5 remaining so that I avoid any early full repayment charges....

Has anyone else experienced this?

Thanks
Mark

DCFC79

What does your contract say ?

markpearce1974

It's being posted out to me.... it just seemed a bit odd that's all that there's a limit imposed

Pixie5740

Why does it seem odd you you? Did you not read the terms of the loan you were signing up to before applying, specifically the part about overpayments if you were particularly interested in making overpayments?

jonesMUFCforever

Did you apply in branch or online?
They offer different types of loans depending on how you apply.

Branch loans called flexible loans do not have any ESC and have not had this charge for some time.

Gaz83

It wouldn't surprise me if more and more lenders start to do this to avoid people paying 99% of their loan then leaving a small amount to be collected by DD, thus avoiding early settlement charges.

ParaJon

Before Lloyds switched to their "Flexible loans" you incurr an early repayment charge for settling the loan early.

However if you pay off all bar 1 monthly payment you MAY or MAY NOT avoid this.

Not that i used to work for a certain bank or anything....


EDIT: If my memory serves correct the charge is usually 56 days interest

markpearce1974

Thanks all for your help! You're right in so far that all of the terms and conditions should have been read and understood. At the time I was simply keen on securing the loan and hadn't thought about the possibilty of paying it off earlier. Lesson learned I think...

ParaJon

markpearce1974 wrote: »

Thanks all for your help! You're right in so far that all of the terms and conditions should have been read and understood. At the time I was simply keen on securing the loan and hadn't thought about the possibilty of paying it off earlier. Lesson learned I think...

Still paying it off earlier and worst case scenario incurring a 56 day interest penalty would still be cheaper than letting it run it's course.

jonesMUFCforever

I have done a dummy application for a loan with Lloyds- there is no mention anywhere of only being allowed to repay 80% of the loan before the early settlement charge kicks in.