HSBC Personal Loan - Paying early.

Konrad.

Two days ago I took a loan from a HSBC - 15000 pounds, for a 60 months. They offer me a 7% interest.


Today I won a 8000 pound, so I need only 7000.



What you think, what is better option for me:
- cancel that credit with no interest, and took new one for 7000?
- pay now this 8000 to a current loan, so this should lower my interest and time to paid off all loan. On T&C in HSBC there is no penalty, or any fees for paying earlier. So, now for 15000, total interest is around 3000 pound, but if i pay 8000 now, interest should be only around 1500? Am I right?


Thanks, Konrad.

jonesMUFCforever

It depends on the terms of your loan.
Some loans will accept an early repayment but will charge a fee (normally 2 months interest) some will reduce your monthly repayment to take account of the reduced debt - others may not, you continue to pay the original monthly payment which in itself will reduce the loan faster therefore you pay less interest.
You will certainly save quite a bit overall but without more information difficult to gauge by how much.

Konrad.

I found in my contract:

Can you repay the loan early?
9.You can repay all, or part, of the loan early by giving us notice in writing or by telephone. If you give us notice, we will tell you the amount needed to repay the loan in full within the next 28 days (or on a later date you tell us).



10.If you repay part of the loan early, your monthly repayment will stay the same but you may repay the loan more quickly. If you repay the loan in full, the formula in the regulations we use to work out the reduced amount of interest we can charge, works as if we charged interest at the rate that applies to the loan from the date we gave you the loan to the date which is 28 days after you give us notice, plus an additional month if your loan is repayable over a period of more than 12 months. For example, if the loan is for 36 months and you give us notice on 1 September that you want to repay the loan on 14 September, the amount required to repay the loan will include interest up to 29 October

So, there is nothing about any penalties. Except they charge extra for a one month, if i pay everything 12 or more months before end of a deal.


Am i right?


And of course if i pay now this 8000, that my interest will be much more? But payments doesnt change, so i will repay much faster?


Thanks for answer.

Curls2208

Hi,

Firstly 7% is high for a loan of 15000. Did you check, sainsburys, tesco, post office etc? If you can get one of them you can get one for less than 3%! My advice? If you can get a better rate with one of the others get that and cancel the HSBC loan.

Keep your 8K and take out another 8k if necessary.

https://www.moneysavingexpert.com/loans/cheap-personal-loans/#cheapestfor7500