HSBC Loan Repayment

MJB1208

Hello,
Possibly a stupid question but it's my first loan I've had... I'm 2 years into a 5 year loan with HSBC and at the end of the month I will have £3000 ready to pay it off.

On the app it says my current loan balance is £4100, and it will cost £3200 to pay the loan off today, with a £900 interest refund.

Does this mean I can just call up and pay the £3200 and be done with it, or will I have to wait and pay £4100 and then get £900 in interest refunded to me? Second option seems to have no logic but the answer I got from HSBC wasn't clear at all. Can anyone who has paid a loan off early please let me know?

Thanks.

[Deleted User]

You just pay the settlement figure.  There's no refund.

newdriver101

I had an HSBC loan a few years ago and yes, I did get a small rebate for overpaid interest when I paid the loan back early.  
Some banks treat the loan and interest as 2 separate monthly payments/charges - so the loan is a fixed amount and the interest is amortised so varies each month.
I think HSBC might be different to other banks as I recall HSBC calculates the interest over the life of the loan and that is factored in the monthly repayments - meaning you only make one fixed monthly repayment (which includes loan and amortised interest).  So if you make any overpayments during the loan period, the monthly repayments stay the same and it is only when you pay your loan back that the interest is adjusted/recalculated so you get a rebate/cashback for any over-paid interest.  I do seem to recall something about a small cashback if you pay back early but not 100% sure if I remember this correctly...

mika_dm

newdriver101 said:

I do seem to recall something about a small cashback if you pay back early but not 100% sure if I remember this correctly...

You receive a small cashback when you pay off the loan at the end of the arranged term. If you pay off the loan early, you don't receive the cashback. 
If you repay the loan early, you receive a refund for the difference on interest(which will be deducted from the final sum to pay).
To close early the loan, call HSBC, they will send you a settlement figure and you pay that one.