TSB Loan Settlement (0% Credit Card)

kroxx

I had a £20,000 loan that is now down to around £13,500 and is 12% APR. I have a couple of credit cards where I have been offered 0% on cash transfers to my bank with a one off 3% fee for 2 years (most of it would be paid off by then). If I pay my loan off I would save around £1,800 in interest and it would only cost me around £400 for the cash transfer one off fee. I can overpay as much as I want on my loan, but on getting a settlement figure, there is an early settlement fee of around £250. My question is this: Could I overpay my loan by £13,100 leaving £400 left for the final payment and would this then prevent me from having to pay the early settlement fee?

patch1969

kroxx said:

I had a £20,000 loan that is now down to around £13,500 and is 12% APR. I have a couple of credit cards where I have been offered 0% on cash transfers to my bank with a one off 3% fee for 2 years (most of it would be paid off by then). If I pay my loan off I would save around £1,800 in interest and it would only cost me around £400 for the cash transfer one off fee. I can overpay as much as I want on my loan, but on getting a settlement figure, there is an early settlement fee of around £250. My question is this: Could I overpay my loan by £13,100 leaving £400 left for the final payment and would this then prevent me from having to pay the early settlement fee?

Yes, this is exactly what I did, take the balance to below what you normally pay each month, so effectively you're in the final month, and then call them to make the final payment by debit card and close the account. There will be a minimal amount of residual interest. You won't be charged the usual 58 days interest. 

Also see this thread: https://forums.moneysavingexpert.com/discussion/6240878/paying-off-tsb-loan-early 

The final reply from the OP is very informative.

retiredbanker1

Yes as long as TSB don't charge an early settlement fee for part repayments.

Most lenders don't - some do - check your loan agreement.