Looking to avoid any early repayment charges

[Deleted User]

Hi all


I have a small personal loan with a high street bank that I'm looking to settle early. To avoid picking up any early repayment charges I was thinking about making an overpayment (which I can do for free) and leaving a £10 balance to collect by direct debit next month. This seems to get around the problem of paying the full balance off in one go and picking up an early repayment charge which I think is something like 58 days interest. Anyone done something similar?


Thanks

[Deleted User]

Thousands of people have done something similar.

BakingC

You might find the T&C of you loan say the extra interest is payable on any overpayment not just redemption so this wouldn't actually save you the ERC.

However if you are in a position to as long as there is more than 2 months left to run on the loan you would be better off still overpaying (unless you get more interest post tax keeping the money).

jimbo26

A family member did this recently with a TSB loan, and avoided the early settlement payment

foxy-stoat

Deleted_User wrote: »

Hi all


I have a small personal loan with a high street bank that I'm looking to settle early. To avoid picking up any early repayment charges I was thinking about making an overpayment (which I can do for free) and leaving a £10 balance to collect by direct debit next month. This seems to get around the problem of paying the full balance off in one go and picking up an early repayment charge which I think is something like 58 days interest. Anyone done something similar?


Thanks

Depends on the lender - what does your paperwork say about over payments? Have you read it yet?