Secured Loan (FirstPlus) Question

DanBarrett

Can anyone help with this question:

Do Secured Loan companies, in m case FirstPlus allow you to settle a large amount of the outstanding balalnce?

Outstanding Balance - £42000
Pay Lump Sum - £25000
New Balance - £17000 (now reduced payments)

I understand that this will occur charges, but will they allow this?

Many Thanks

CLAPTON

its simply a matter of the loan companies policy.... so you need to read your T&Cs or phone up first plus and ask

if its allowed it may not necesssarily be financially beneficial depending upon any fees and whether it reduces the overall interest paid.

bathgatebuyer

They probably will, but and it's a massive BUT the charges are often so steep that it's not worth it. For example, the quotes I had a few years back had early settlement charges of about £800 per thousand borrowed in the first 3rd of the loan, £500 in the 2nd third, and £330 per thousand borrowed in the final third of the loan.

(Obviously that was in the terms and conditions quoted to me and yours may be more favourable)

DanBarrett

I hope that is not the case! They can only charge 2 months interest, plus the £150.00 Settlement Fee.

My aim here is to settle the loan and open a new loan acccount for £17,000 (the balance)

CLAPTON

It wasn't clear that you intended to get a new loan, add it to your 25,000 then settle the old loan completely. If you do that then the settlement charges should indeed be two months interest plus fee.
However if you simply pay off 25,000 then you need to read the T&Cs to see if it makes financial sense.

DanBarrett

Thank you.

I am hoping FiistPlus will take my 25K, use it towards closing my account and set up a new loan account for remaining 17k

CLAPTON

what are first plus charging you in interest?
would it not be cheaper to increase the mortgage?