How do I make overpayments on LTSB loan?

Paranoid124

mrmajika wrote: »

It is almost that simple -yes. You can make a lump sum overpayment of the outstanding balance minus the last loan payment. On your next direct debit date your full loan amount (in your case £144.68) will come out. The following month you will have a partial payment to make, which will be the rest of the interest. That is, the interest on the £144.68 for the month. This should only amount to a few pounds and pence.

Doing it this way means that you will avoid the fee.

LTSB calculate the interest daily and apply it to the loan account monthly so the balance you see currently is the balance as at 31st January. There will be interest for February (only 5 days worth so far) to be added to this figure.

If you have PPI on the loan, things are a little more complicated, as when paying it off early, assuming you haven't claimed, you have a rebate on the unused portion to get.

I hope all that makes sense.

Hey all, been a long-time watcher of this forum but finally taken the leap into registering!

I'm about to pay off my loan early with LTSB, but I'm a bit confused by the above - by paying off the loan - next installment, are you saying we avoid the early settlement fee?

Seems a bit strange to me...:o

5limJim

mrmajika wrote: »

It's the loans department within one of the call centres.


I'm not sure how this can be, as the early settlement fee should be equivalent to 58 days interest based on the outstanding balance at the time you want to settle, so you should benefit from paying it off early even with the fee.

confused me as well, when I originally called up I was told that to settle the loan was 'x' amount, and when I explained that it works out at roughly £60 more than the balance on the loan according to the website (including the rebate from PPI) and that I woudl be better off leaving the loan for the term the advisor said 'it would appear so in this instance yes' they sent the form out for me in case I decided to go ahead, but obviously I didnt...

The balance on my loan is now 853.63 according to the TSB website, which means I should have roughly 6 payments left to make, might call again and see what figure I get this time, perhaps it wasn;t so much of a big saving because I had less than 12months left on the loan... god knows

mrmajika

5limJim wrote: »

confused me as well, when I originally called up I was told that to settle the loan was 'x' amount, and when I explained that it works out at roughly £60 more than the balance on the loan according to the website (including the rebate from PPI) and that I woudl be better off leaving the loan for the term the advisor said 'it would appear so in this instance yes' they sent the form out for me in case I decided to go ahead, but obviously I didnt...

The £60 would have been the early settlement fee, which is equivalent to 58 days worth of interest.

Bear in mind that LTSB calculate the interest daily and apply it to the loan balance monthly. They don't front load the interest (i.e. put it all on the loan balance on day one of the loan).

Therefore, the settlement on your loan may have been more than what was showing as the balance on your internet banking, however, interest is added to that total each month, so you would have been better paying it all off even with the early settlement fee / charge.

The balance on your loan is updated once a month. At that point all the interest from the last 30 days is added to the total and your loan installment amount is deducted.

I hope that makes sense !

mrmajika

Paranoid124 wrote: »

I'm about to pay off my loan early with LTSB, but I'm a bit confused by the above - by paying off the loan - next installment, are you saying we avoid the early settlement fee?

Yes.

Overpayments are penalty free and you can overpay as much as you like. So long as there is a balance remaining on the loan and the last loan payment is collected by direct debit, there is no early settlement fee.

If clearing the loan off right down to the very last penny there is a charge of 58 days worth of interest of the balance at the point you want to settle.

Paranoid124

mrmajika wrote: »

Yes.

Overpayments are penalty free and you can overpay as much as you like. So long as there is a balance remaining on the loan and the last loan payment is collected by direct debit, there is no early settlement fee.

If clearing the loan off right down to the very last penny there is a charge of 58 days worth of interest of the balance at the point you want to settle.

You don't know how much that is music to my ears!! Thanks soooooo much, you just saved me £100 or so! :T

NikNak_3

mrmajika wrote: »

I'm an LTSB staff member and work in the call centre. We give that out to customers who want to make overpayments to their loan. I also have an LTSB loan and make overpayments this way also.

I can appreciate that some random person on a forum is telling you to send money to a particular sortcode and account number, but I can assure you it does work.

You could send a nominal amount (£1 or so) to check that it works. I do this with all new bill payments and standing orders I set up - just to make sure everything is going as it should.

It takes approximately 3 working days for the amount to credit the loan account.


http://forums.moneysavingexpert.com/showthread.html?t=503950 was my last post on this subject.

Thanks very much, that's put my mind at rest now!

5limJim

mrmajika wrote: »

The £60 would have been the early settlement fee, which is equivalent to 58 days worth of interest.

Bear in mind that LTSB calculate the interest daily and apply it to the loan balance monthly. They don't front load the interest (i.e. put it all on the loan balance on day one of the loan).

Therefore, the settlement on your loan may have been more than what was showing as the balance on your internet banking, however, interest is added to that total each month, so you would have been better paying it all off even with the early settlement fee / charge.

The balance on your loan is updated once a month. At that point all the interest from the last 30 days is added to the total and your loan installment amount is deducted.

I hope that makes sense !

Hi mrmajika, the way you explain it makes sense to me, but confuses the hell out of me when I speak to the guys in the call centre.

I went online and my balance shows as 853.63 (I appreciate this is minus the interest to be added as you detailed below.

I called the CC and they confirmed the same figure.

I asked how many payments were left and the advisor confirmed 5 payments left to make, June 28th being my last payment.

So, 5 payments at 144.68/month equals 723.40, so when I asked for a settement figure I was given 880.36 as the figure to settle the loan.. when I explained that 5*144.68 is nowhere near that the advisor said my last payment will probably be higher in June... no wonder people don;t settle early when its so confusing....

samizdat

Does this apply to new loans? Martin's article on loans says the cheapest flexible loan is currently from Egg at 9.9% APR. Lloyds is currently offering loans at 6.9% or even 6.4% for Premier customers so if these loans are flexible, that would make a huge difference to many people (although Martin does mention Zopa for good credit scorers, flexible at 6.38%)!

Martin's article used to refer to the Lloyds loans but since it no longer does, I had assumed that Lloyds had changed its policy, especially as he also says "the era of the cheap fully flexible loan ... has long gone."

I appreicate that flexibility may involve more than the ability to repay early (I know the Lloyds trick of almost repaying and waiting for the final monthly payment to settle the last bit) but, in practice, that is always by far the most important thing.

Also, I can't see any reference on Lloyds's web site to the question "can I make one off payments on my loan?"

jonesMUFCforever

6.4% to Premier; remember they have to pay £25 a month for the Premier account.

samizdat

I called Lloyds this morning and was told one still can make penalty-free overpayments on their loans.