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Sometimes it just isn't worth sweating stuff like this. Some lenders make settlement charges, some don't. Some will on final settlements, but might not if you pay a lump short of full settlement. You need to factor the likelihood of having to pay these fees into which lender you choose in the first place.
However, if you have a loan at 3.5% apr, and pay off a lump of £3k, you will save £105 in interest over a year, with a charge of £17.50 at most. It is almost always better to pay off early even with a two month interest charge.
OK I've just called TSB and paid the loan off. I did this by first paying a lump sum which left a small two digit balance, then I waited until a couple of days after the overpayment had gone through because I wanted to make sure that their systems had all been given more than enough time to update to the new balance. I then called TSB, asked to close the loan and was told that there's no fee to pay because I'm in the last month of the loan, and I was just asked to clear the balance. I'm not sure what would've happened had I not called, perhaps it would've just taken the remaining balance and closed it automatically itself; but my concern was that it would take the usual monthly repayment, or take what remains plus a fee.
So, I can confirm that as of today the best way to close off a TSB loan early is to pay a lump sum to clear almost all the balance, give it a few days and call up to pay off the rest. You will not be charged a fee so long as the balance remaining is less than 1 month's repayment.
