Settled Loan But Changed Mind

happy2017

Hello, I've got a friend who has settled a loan and made a payment of £2,400, he did this so he can then apply for a larger loan.

What happens if the new larger loan is not accepted? can you contact the loan company and request the £2,400 back and continue with the existing monthly payments?

Is there a change of mind period or something?

Thanks in advance for any advice.

MattMattMattUK

happy2017 said:

Hello, I've got a friend who has settled a loan and made a payment of £2,400, he did this so he can then apply for a larger loan.

What happens if the new larger loan is not accepted? can you contact the loan company and request the £2,400 back and continue with the existing monthly payments?

Is there a change of mind period or something?

Thanks in advance for any advice.

No he cannot get the overpayment back and no there is no grace period to change his mind, once he pays then that is it, the loan is cleared, the money has paid off the debt. 

Ayr_Rage

Once the first loan is paid off that's the end of that, there isn't any cooling off period on redemption.

If using the same lender, then the payment history during the first loan may be taken into account but ultimately your friend will have to pass the lender's current affordability checks to get the new larger loan.

DullGreyGuy

Assuming it's a traditional loan then no they cannot do anything other than apply for a new loan. 

Lenders have on occasions offered flexible credit facilities under varying marketing names which were somewhere between a loan and an overdraft. With those you can draw down more funds if required after paying it off. Dont know if anyone currently offers anything like it... Barclays or NatWest used to (can't remember which it was I had one with) but they withdrew the product converting any outstanding balances into a standard loan effectively. 

happy2017

he has been in touch and its gone to the underwriters

elsien

happy2017 said:

Hello, I've got a friend who has settled a loan and made a payment of £2,400, he did this so he can then apply for a larger loan.

What happens if the new larger loan is not accepted? can you contact the loan company and request the £2,400 back and continue with the existing monthly payments?

Is there a change of mind period or something?

Thanks in advance for any advice.

My advice would be to point him at the debt, free wannabe section of this forum, so that he doesn’t keep need to keep applying for larger loans.