Is it worth paying off end of loan early?

fireworkskaj

Hi guys, apologies if this is in the wrong topic.

I took out a loan in 2018 at 19.70% APR. It was for a car, and I had no credit history to speak of until the loan.
Original amount was £5,000, and I am now down to £608.97. I am in the fortunate position that I could, in theory, pay this off in full now. 
I haven't yet requested a settlement, but considering I pay £127ish a month, I was wondering if it's in my interest to request one or will any potential saving be wiped out by early settlement fees? I have about 5 months left I believe.

RobM99

Ask them, rather than surmise.

Ebe_Scrooge

Yep, ask for a settlement figure.

They are allowed to impose an early settlement fee.  The maximum they can charge is 2 month's interest, but only 1 month's interest if the loan has less than 12 months left to run.  This is the maximum they're allowed to charge, some lenders will charge less, or if you're lucky, nothing at all.

So with 5 months left to pay, you'll still save a bit of interest (4 months' worth at a minimum, assuming they impose a charge of 1 month's interest).  But every little helps, as they say.