Trying to make a lump sum payment!!! help please

OASIS11

Hi All.
I have a vanquis bank loan (worst thing i ever did) and i have around £2200 left. The settlement on it is £2040.00 but i have a dentist app next week that willl cost me £500. I don't want to take out any further loans etc so decided not to settle this but make a payment of £1500 and reduce the payments, and settle this off in April 2022 (with bonus from work) (i have got some money from a family member unfort passing away at the moment) 

I asked for a SF on the thursday, and Friday i asked to make a partial SF instead and reduce payments. They said they would call me back today as they had to speak to a manager to confirm the figures as i had a couple of payment holidays last year due to covid. 

i got a call back today. and she said she was grabbing the figures - put me on hold - came back and said she couldn't reduce my monthly instalments but only my term. I asked is it due to the amount, and she said no she has been advised they wont reduce my monthly amount only the term regardless.
WHY? no answer. Ive asked for a call back from a manager. 

i have this in ,myT&CS - surely i am in my right to reduce my payments (as im going to settle april anyways?) 
it seems bizarre they are being difficult about me making an extra payment. 

Ebe_Scrooge

It does sound a little strange.  As you say, overpayments will usually give you the option of reducing either the terms or the monthly payments.  I'm wondering whether your earlier payment holidays have imposed additional T&Cs - do you have any documentation as to the terms of the payment holiday, and whether that would have any affect or override the standard T&Cs?

If not, then I would try to speak to someone more senior in Customer Services and ask for an explanation.

MovingForwards

Making an overpayment will reduce the interest payable as there's less of the original loan amount outstanding, in turn this will reduce the monthly installment, even if the term is reduced.

OASIS11

MovingForwards said:

Making an overpayment will reduce the interest payable as there's less of the original loan amount outstanding, in turn this will reduce the monthly installment, even if the term is reduced.

They are reducing the term and keeping the payments at the same instalment amount. I am waiting on a call back tomorrow with an explanation as to why they can’t keep my term the same and reduce payments. 

OASIS11

Ebe_Scrooge said:

It does sound a little strange.  As you say, overpayments will usually give you the option of reducing either the terms or the monthly payments.  I'm wondering whether your earlier payment holidays have imposed additional T&Cs - do you have any documentation as to the terms of the payment holiday, and whether that would have any affect or override the standard T&Cs?

If not, then I would try to speak to someone more senior in Customer Services and ask for an explanation.

Thanks for the reply! Nothing in the T&Cs 
I am waiting on a call back so will update tomorrow. 🤨

MovingForwards

OASIS11 said:

MovingForwards said:

Making an overpayment will reduce the interest payable as there's less of the original loan amount outstanding, in turn this will reduce the monthly installment, even if the term is reduced.

They are reducing the term and keeping the payments at the same instalment amount. I am waiting on a call back tomorrow with an explanation as to why they can’t keep my term the same and reduce payments. 

Each month the loan (capital) is outstanding interest is added to the current balance.

By paying £1500 off the capital that will leave a small balance and a lot less interest to be added each month.

Therefore the monthly payment cannot remain the same as before the overpayment as the capital is not generating the same amount of interest due.

Use a loan overpayment calculator to see.

I'm doing it with my car finance.
When I make my overpayment I reduce the term. My agreement gets recalculated and my normal monthly installment reduces as there's less capital outstanding.

OASIS11

I understand, but they are reducing my term and keeping my payments the same. I will still get a saving of interest but instead of my term being 15 it will be 6. Tempted to just cancel my dentist appointment and pay it all off because paying EXTRA towards your finances shouldn’t be this bloody hard 😂🤣🤣🤣