Loan Question

Jasoncmor

Jasoncmor

Jasoncmor

Associate
Joined
13 Feb 2010
Posts
611
Location
Bournemouth
Hi all

I wondering if anyone can shed some light on a question I have regarding loans.
I had 2 loans, with Nationwide, one for my collage course, the other for my car, I wanted to combine them, pay less each month, but then be able to save more money, and then pay a new loan off early.
So I took out a new loan with my Bank, Lloyds, for the total amount of the 2 loans I already had, with the total being what was shown on my accounts through internet banking.
The interest has always been high with Lloyds for some reason, so this was only a temporary loan, I had to wait 30/40 days after I had paid off the first loans to get another, so had to pay a loan repayment on the new loan, once I was eligible to get a new loan from Nationwide, I did so, and took out the amount required to cover the new Lloyds loan, reason being is Nationwide offer me a much much better interest rate than lloyds.
But, when I went to pay off lloyds, I was charged around £200 more on top of the current balance on the loan, my statement shows the starting amount, my first payment, then interest added on, which is what I was expecting to pay, the same as what I did with Nationwide, and I spoke to them and they said that is how it worked, and there was nothing else to pay, so is Lloyds just pulling a fast one? I ended up paying more than the original loan, to pay it off, even after a payment on the account, and that seems wrong to me?

Does anyone know more about this sort of thing?

Cheers
 
I don't have any loans to check but if I look at my mortgage it shows the total outstanding balance but says clearly under it "This amount is not a final settlement figure". I would have to pay more than that for early repayment fees and also the way interest is added - it's calculated daily but added in a lump sum at the end of each month.
 
SaBBz said:
This. Lloyds charge early repayment fees whereas Nationwide allow unlimited overpayments (and full repayments) with no fees.
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Op just paid £200 to learn nationwide is one of the best lenders available and better than Lloyds I'd say that was money well spent because it will pay dividends when he buys a home
 
Psycho Sonny said:
Op just paid £200 to learn nationwide is one of the best lenders available and better than Lloyds I'd say that was money well spent because it will pay dividends when he buys a home
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Agreed.

I used to work for Lloyds and now work for Nationwide though, so I’m probably biased!
 
Iirc my Halifax (part of Lloyd's) loan states 56 days interest for early repayment, so this is probably what you got hit with - make sure you read the small print!
 
Lloyds a heavily regulated, very well known bank, pulling a fast one, and not that you didn't read the terms and conditions.

Definitely.

Report them to the police.
 
Jasoncmor said:
Cheers for your replies all, much appreciated.
Admittedly I hadn't read the terms, which I should have done.



What is wrong with going to college to learn a new skill to better yourself?
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You spelled it incorrectly and did your post in one huge paragraph that was difficult to decipher. That's why people made jokey comments.

When taking a loan the very least you should do is read what interest rate is offered and how they handle early payment.
 
theone8181 said:
I didn't get the reference either:p. I know sometimes it's cheaper to take a bit on an ERC just to end a loan early (our mortgage was certainly one of those).
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I don't think that is correct especially for mortgages. The whole point of an ERC is to make up for loss in interest over the duration of the agreement.

Alternatively you can invest that money elsewhere to offset interest.

For example my mortgage it's 5% for an ERC reducing by 1% every year until it's 0% at which point I can change deals or pay without any ERC.

Also on mortgages with nationwide you can overpay by 10% of the original mortgage amount without any charges. So you can make overpayments to reduce interest by quite a bit penalty free.

It would make zero sense to pay 1-5% to end it early as I could be making 1-5% on that money instead. It's entirely dependent on the arrangement in place. But you would be better off cancelling out the interest by investing than paying an ERC and losing money.
 
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