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Paying off a loan

The Northern MonkeyThe Northern Monkey Posts: 19,174
edited July 2011 in The hub
I have an outstanding personal loan amount of about £300 that I want to pay off on payday, however after reading a bit on the web i'm not sure that is such a good idea.

From the sounds of it, you incur some big charges if you pay it off to zero before the term is up.

However, I've read that people will pay off all of the loan apart from the total of 1 months payment and this will stop any additional charges.

Just wondering if I've got that correct?
I don't want to ask the bank just yet, as one of the things that seems to be common is that if you ask your bank for advise on it, they give you a quote to pay off the total of the loan which includes charges and the quote is active for a month.
However if you just phone up and make a payment they don't!

Posts

  • Andy BAndy B Posts: 8,115
    It can vary between loan agreements as to if there are any charges

    All the info you need about paying the loan off early should be in your loan agreement documents
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  • DCR00DCR00 Posts: 2,160
    you usually only get charged if there is still interest to pay

    interest is usually "front loaded", so you pay that off first, then the principal

    if you try and pay a loan off when you are still paying off the interest, you will normally be charged extra
  • CraigXXLCraigXXL Posts: 1,852
    Best way is to call them and ask for a settlement figure. You normally only get redemption penalties on large loans at discounted rates i.e. mortgages.
  • been doing a search through the t+c's.

    Sounds like I can repay as much as I want over £100, but if I pay off the while loan in 1 go I get charged.

    If I ask for a settlement figure, I think that quote is set for at least a month, so I then can't pay off anything until the month has passed (from what I understand).

    Think I'll pay off 99% and pay the last instalment.
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