How best to settle a loan early?

dkwywbicgia

I want to settle an old Creation loan. I understand they are likely to charge either 1 or 2 months extra interest in the settlement quote they have given me but I am unable to find which online. 

I remember in the back of my mind the old trick of overpaying rather than settling in full to leave a balance of just over 1 month payment left. Then when you come to settle in full the following month the extra interest charge is much lower. 

Is this still applicable today and worth doing?

jonowag

Give them a call and ask for a settlement figure. Work out what you would of paid if you continued the full term. In my experience the loans and arrears i've paid early is normally that current month and the full amount remaining.

regardless your saving money. 

dkwywbicgia

jonowag said:

Give them a call and ask for a settlement figure. Work out what you would of paid if you continued the full term. In my experience the loans and arrears i've paid early is normally that current month and the full amount remaining.

regardless your saving money. 

Yes I will be paying it off. I have a settlement figure. I just remember it used to be a greater saving by paying it off in two stages to reduce the extra interest charge but I don't know if this loophole still exists. Hoping someone out there knows?

Nebulous2

It works / worked for some companies and not others. Some take the early repayment charge from lump sums as well as when you settle the loan. 

You could ask for a quote for a lump sum payment and see how much the balance reduces by, if it is by less than the amount being paid then they will be levying a charge for that too. 

What do their terms and conditions say?  Would the savings be worthwhile?