Loan overpayment whilst snowballing

Peterfwsm

I've just started snowballing my outstanding debt commitments. 

I've made an overpayment to a lender who have emailed today to say:

We've noticed that you've made a large payment which has resulted in your account being in credit by £300. 

Currently we're treating this as an overpayment which does not benefit from an interest rebate. Overpayments can be used to offset any future payments due on your account. If you don't contact us this will be how the credit on your account will be treated.

If you'd like to receive an interest rebate and reduce your monthly contractual payments please reply contact us requesting this credit to be applied as a partial settlement. Once you've requested this, we'll confirm your interest saving and future contractual payments via email.

I'd like it to be treated as a partial settlement but keep the same future base payment. Is this the 'right' thing to do, or should I request as a partial settlement, allow the payment to be reduced and just add the difference to my additional snowball payment each month?

MovingForwards

It's the second option.

Your balance goes down and so does the monthly interest applied to the balance.

This then leads to a lower contractual monthly payment as there's a lower outstanding balance and less interest being applied to the balance each month.

I did it with my car HP, kept having interest rebates as I made overpayments and the normal DD payment crept down each time.

Peterfwsm

Perfect, thanks!