Repaying loan early

sarah1980

Hi and happy new year to all. 

We have an unsecured personal loan with around 4 years left to pay. Recently came into a small sum which would enable us to pay this off in full. Is it right that we should leave a small amount on there to avoid early repayment charges? And if so, presumably there’s a minimum you have to pay monthly (eg I couldn’t leave 48p on there and repay 1p monthly for the next 4 years?). 

Or Is it worth the ERCs just to have this off my file? Interest rate is around 5%. Thank you. 

Mark_d

How much do you owe on the loan?

https://www.moneysavingexpert.com/loans/early-loan-repayments/

This page suggests that the ERC is only 1-2 months interest, so you would be saving 46 months of interest by repaying early.

FlorayG

I had this dilemma, I called the loan company to ask how much the early repayment charge was and it was only one month's interest, so I paid it off. Find out how much it will cost you before making that decision

retiredbanker1

The trick to avoid ERC is to find out what the balance outstanding on the loan is (not settlement figure) pay that off leave the d/d to take the next due payment as normal thus putting the loan into credit.
The systems should then refund you the overpayment less any outstanding interest and close the loan.