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  • FIRST POST
    • MPEARSON
    • By MPEARSON 14th Jan 20, 10:27 AM
    • 17Posts
    • 1Thanks
    MPEARSON
    Early settlement penalty
    • #1
    • 14th Jan 20, 10:27 AM
    Early settlement penalty 14th Jan 20 at 10:27 AM
    Hello all,
    Wondered if anyone can advise please.
    I have a loan with an outstanding balance of 15k
    I would like to settle this loan early. The loan agreement says that a penalty of 28 days interest will apply with an early settlement.
    However another term of the agreement says that I will not be charged for overpayments.
    So can I just make an overpayment of 14,900, with no penalty. Then wait a few days and pay settle the last 100 with the penalty being 28 days interest on the remaining 100?
    Hope that makes sense!
Page 1
    • foxy-stoat
    • By foxy-stoat 14th Jan 20, 10:55 AM
    • 5,696 Posts
    • 3,533 Thanks
    foxy-stoat
    • #2
    • 14th Jan 20, 10:55 AM
    • #2
    • 14th Jan 20, 10:55 AM
    Maybe make an overpayment of the balance less the next monthly payment.
    • BoGoF
    • By BoGoF 14th Jan 20, 11:07 AM
    • 5,894 Posts
    • 5,955 Thanks
    BoGoF
    • #3
    • 14th Jan 20, 11:07 AM
    • #3
    • 14th Jan 20, 11:07 AM
    It also depends what you means by 'outstanding balance' is that purely capital or does it include interest?
    • lindens
    • By lindens 14th Jan 20, 11:22 AM
    • 2,698 Posts
    • 7,746 Thanks
    lindens
    • #4
    • 14th Jan 20, 11:22 AM
    • #4
    • 14th Jan 20, 11:22 AM
    would make a payment of the current balance minus (a monthly payment +10)
    once that payment has cleared ask for a settlement figure and pay it off
    You're not your * could have not of * Debt not dept *
    • jonesMUFCforever
    • By jonesMUFCforever 14th Jan 20, 8:58 PM
    • 26,347 Posts
    • 13,519 Thanks
    jonesMUFCforever
    • #5
    • 14th Jan 20, 8:58 PM
    • #5
    • 14th Jan 20, 8:58 PM
    At the moment we are all guessing!
    The loan agreement will tell the OP what penalties are for early repayment AND how he can make overpayments and what happens as a result of the overpayment.
    What goes around - comes around
    give lots and you will always receive lots
    • Ben8282
    • By Ben8282 14th Jan 20, 10:01 PM
    • 4,764 Posts
    • 2,629 Thanks
    Ben8282
    • #6
    • 14th Jan 20, 10:01 PM
    • #6
    • 14th Jan 20, 10:01 PM
    The idea of making a large overpayment and then subsequently making a request to settle the loan is a known method of reducing the early settlement penalty of x months interest charge and, although I have not done it, I believe that it works.
    would make a payment of the current balance minus (a monthly payment +10)
    once that payment has cleared ask for a settlement figure and pay it off
    Originally posted by lindens
    I think this will be ok although perhaps I would make a slightly lower payment and wait a little bit longer so as not to be too obvious.
    Perhaps before this months payment is due, make a payment of the balance less 2 months payments, allow this month's payment to go through then see what happens. I am assuming here that the balance you are seeing is the actual balance, not some sort of inflated balance including interest, and you are seeing the interest added and the payment deducted on a monthly basis.
    Last edited by Ben8282; 14-01-2020 at 10:08 PM.
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