Cost more to settle loan early than pay over remaining period??

Gina_Gee

Hi everyone

Hoping someone can provide me some advice. My husband has a loan with Sainsbury's Bank which we have a couple of years left on and and were looking to settle it early. On calling Sainsbury's, they stated that the remaining value on the loan was £17,799.52, and the final settlement figure is £18,192.14, meaning they're quoting the full remaining value plus 58 days of interest.

Under Consumer Credit Regulations I didn't think that was allowed? The explanatory note on the regulations states they "entitle the debtor under a regulated consumer credit agreement to a rebate where all or part of the amount payable to the creditor is paid before the date on which it is due", although I am aware the Consumer Credit Act does mention something about payments over £8000 so I assume this could have some impact, but I wouldn't have thought that would mean paying more overall.

Has anyone else ended up with a similar situation? Or can advise how to deal with this?

Thanks in advance for your help :-)

On-the-coast

You’ve misunderstood. Phone them back and ask how much you will repay if you continue your loan to the original end date… it will be a lot more than either of the two figures you reference. 

molerat

Did you ask for a settlement figure to pay the loan off immediately ?

I suspect it is crossed wires, one figure is the balance outstanding and the other the total to pay to end of term.

Gina_Gee

Thank you both, these 2 comments helped us figure it out! £18,192 is the settlement figure, the £17,799 is the current outstanding amount on the loan but unhelpfully they don't state anywhere what's left to pay based on the full term. Calculating this (£20,343) shows we'd save over £2000 in interest which matches what we'd expect.