Question about early repayment on halifax loan

almostthere1984

Hi all, I've got a halifax loan with a balance of around £15564 (5.9% apr). I was looking to settle this loan early, and when I use their early closure calculator it says if I settle early the figure is £16133 saving £1650 on interest. However, if I use the 'pay extra from your loan' and put in a figure of £15000 it says my new balance will be £564 and cleared in 2 months. Say I did this, what happens once the loan is clear, will they then put my account into negative because technically I owe them a load of unpaid interest? Or is this some kind of loophole that doesn't get classed as an early repayment? Hope that makes sense! Thanks!

Mark_d

I've noticed something similar of my mortgage.  I'm allowed unlimited overpayments yet there is an early repayment charge.

MorningcoffeeIV

almostthere1984 said:

 Say I did this, what happens once the loan is clear, will they then put my account into negative because technically I owe them a load of unpaid interest? 

There wouldn't be any unpaid interest if the loan was cleared. 

Make the large overpayment and let the DD take the remainder.

almostthere1984

MorningcoffeeIV said:

almostthere1984 said:

 Say I did this, what happens once the loan is clear, will they then put my account into negative because technically I owe them a load of unpaid interest? 

There wouldn't be any unpaid interest if the loan was cleared. 

Make the large overpayment and let the DD take the remainder.

True, but they charge an early payment fee in the form of interest. So what would happen if I made a payment of £15500, then my next payment by direct debit would be £64 + a tiny amount of interest? This would work out a lot cheaper than settling the £16133 they quoted if I want to clear the loan in one hit. Or am I missing something?

MorningcoffeeIV

almostthere1984 said:

MorningcoffeeIV said:

almostthere1984 said:

 Say I did this, what happens once the loan is clear, will they then put my account into negative because technically I owe them a load of unpaid interest? 

There wouldn't be any unpaid interest if the loan was cleared. 

Make the large overpayment and let the DD take the remainder.

True, but they charge an early payment fee in the form of interest. 

Not on the initial overpayment, which is why it's working out cheaper.

The remaining balance would be £564, not £64.

almostthere1984

MorningcoffeeIV said:

almostthere1984 said:

MorningcoffeeIV said:

almostthere1984 said:

 Say I did this, what happens once the loan is clear, will they then put my account into negative because technically I owe them a load of unpaid interest? 

There wouldn't be any unpaid interest if the loan was cleared. 

Make the large overpayment and let the DD take the remainder.

True, but they charge an early payment fee in the form of interest. 

Not on the initial overpayment, which is why it's working out cheaper.

The remaining balance would be £564, not £64.

Thanks, is it worth me speaking to them to confirm it? If so then may as well pay £15500 then let the last £64 come out by DD. Seems too easy to avoid the full early repayment fee.

MorningcoffeeIV

almostthere1984 said:

MorningcoffeeIV said:

almostthere1984 said:

MorningcoffeeIV said:

almostthere1984 said:

 Say I did this, what happens once the loan is clear, will they then put my account into negative because technically I owe them a load of unpaid interest? 

There wouldn't be any unpaid interest if the loan was cleared. 

Make the large overpayment and let the DD take the remainder.

True, but they charge an early payment fee in the form of interest. 

Not on the initial overpayment, which is why it's working out cheaper.

The remaining balance would be £564, not £64.

Thanks, is it worth me speaking to them to confirm it? 

Only if you're feeling lonely and need someone to chat to.