Paying off secured loan

Recently I borrowed 25000 as a secured loan via a large, presumably
reputable company, in order to pay off my credit cards. The interest rate I
was offered was 9.5%, although not the best, was a lot lower than I was
paying on the cards.
I may soon may be able to pay off the loan in full due to an inheritance.
When I contacted the loan company, I was told that if I paid off the loan,
they would charge me 6 months interest plus about 270. The best they could
offer without charges would be to pay off 50% of the loan, although even
then the monthly payments would remain the same. Are these offers legal?
(I was not informed of these conditions when I took out the loan, although
maybe it was buried in the small print somewhere). Can I not simply pay off
the outstanding debt and tell them to get stuffed or is there any way to get
around this problem?
Terry D.
Reply to
Terry D
It all depends upon the contract. I don't believe that there's anything illegal about it.
£25,000 @ 9.5% = £2,375pa or £197.92pm interest
6 months = £1,187.50
How long has it got until, paid off ?
What penalties are there for changing timespans/repayments ?
Can you change the monthly payments to something huge and leave £1 to be paid off in n years ?
No doubt they've got this all tied up, so just getting shot of the thing and taking the penalty is probably the least bad option. If it's any consolation, you can get interest of ~6% on your savings.
Daytona
Reply to
Daytona
I believe 'early redemption' penalties have been around for along time and apparently not illegal.
Don't know how this fits with the current hulabaloo over bank 'penalty' charges: perhaps what they can charge may be limited to some formula based on what they have lost..?
If you can pay of 50% but the mothly payments stay the same, presumably the time of the loan is then shortened..? In this case paying off the 50% may be the best bet.
Reply to
whitely525
Check whether the terms of your contract were fair or not.
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terms/guidance
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Reply to
Robin T Cox
Thanks for the advice and the links, which I will study in detail after I find the small print section of my agreement. In the short term, I'll probably take the 50% option. Perhaps then after a year or so, I could pay off another 50% without penalty and then keep on repeating the process?
Terry D.
Reply to
Terry D
Can you afford to pay it off now including their fees? Try negoitating hard again perhaps to get their fees down but ultimately unless you can make as much money in interest as it's costing you then you're losing out.
Once you've paid it off, why not keep putting the amount you were paying into an account to save up. :)
Reply to
Mogga
Presumably there is a legal charge (or is it a "caution") in their favour registered on your house (as it was a secured loan) and that cannot be removed until they agree. You cannot just tell them to get stuffed and expect them to remove the charge on the house.
Robert
Reply to
RobertL

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