Settling Term Loan Early

Mellio

Well you would think that with the current situation as it stands the banks would be more than happy for you to settle your loan early.

They are in fact willing to do it but they want to charge you for giving them thousands of Euro back before its due.

I asked TSB if there would be any early settlement value that would be given for closing out my loan 1 year early, i.e. a discount on the balance for paying it back before its due but I was actually told it will cost €25 because I am paying it back early and clsing the account before its due.

It was a variable loan over a 5 year period, I dont want to divulge to much information but I would say they have made plenty of Interest out of this loan, Im a couple of thousand and still they want to charge me for the privalage of clearing it early.

I find it illogical and totally against what all people, governements, banks are trying to do right and thats make give themsleves more disposeable income in turn which will get spent in the economy, win,win situation but the banks being backwards as always dont see the logic.

I really give up with them.

Has anyone else had this experience or perhaps you have some comments on this area?

should the banks be more accomodating to people looking to clear there loans earlier in light of the current climate?

Mellio

Anyone!

BuffyBot

Please don't bump threads..especially 15 minutes after you post it..


Fixed rate loans differ from variable because you signed up to borrow x amount over a proof of y time and banks on a larger scale make projections and borrow themselves on the back of such agreements (this is a rather "boiled down" simplistic explanation but you get the gist I'm sure). Hence there are charges involved for dissolving the agreement. Variable loans are more flexible but the rates see normally a little higher and can go up making the loan more expensive in the long run.

There is no real reason they should accommodate it, or else they might as well not offer them at all. all.

tony81

What a moaner!

It's probably just an admin fee. The bank planned on making money off you for another year (as per your agreement). Why would they reward you for terminating it early?

On the other hand, if it's a fixed rate loan, consider it the price you pay for peace of mind (this type of loan also costs the bank more in terms of risks and reserves)

What it really boils down to is you made an agreement with the bank, and part of that agreement was an exit charge for terminating the loan early. That's life. On the bright side, if you needed that money for another year at least you'd have access to it.

Mellio

tony81 wrote: »

What a moaner!

It's probably just an admin fee. The bank planned on making money off you for another year (as per your agreement). Why would they reward you for terminating it early?

On the other hand, if it's a fixed rate loan, consider it the price you pay for peace of mind (this type of loan also costs the bank more in terms of risks and reserves)

What it really boils down to is you made an agreement with the bank, and part of that agreement was an exit charge for terminating the loan early. That's life. On the bright side, if you needed that money for another year at least you'd have access to it.

Didn't ask you for your opinion on what type of attributes I have but thanks anyway.:D Sure this is what Boards is for, NO? people just want to go some where to have a moan about things, ok we call them discussions!

most poeple only come on to have a dig at people and comment on other peoples opinions instead of giving an opinion on the topic.;)


Just an admin Fee, you are right but I dont see the admin in taking money from my account to clear a loan, nothing more. Staff get paid to do there jobs no matter what. this is pure excess cash for nothing(like Ryanair).

Why would they reward me for clearing it early, In the current climate where banks are struggling to get mortgage payments as well as loan payments off people you would think they would jump on all cases where people are offering to pay back there loans early especially on a variable rate.

I just wanted to know how it worked and wasnt expecting to be charged for the privilage of giving them €5K 1 year earlier than they were meant to get it.

Anyway I would be getting rewarded by not paying the remaining Interest for the last year so would still be worth my while.

tony81

Mortgages have relatively low interest rates, in the case of trackers less than the bank's cost of capital. Not so with loans.

We could argue that you should have taken out a 4 year loan!

You're prob right, it's quite stingy but there is some admin involved and end of the day I'd be surprised if it wasn't in the t&cs.

Mellio

tony81 wrote: »

Mortgages have relatively low interest rates, in the case of trackers less than the bank's cost of capital. Not so with loans.

We could argue that you should have taken out a 4 year loan!

You're prob right, it's quite stingy but there is some admin involved and end of the day I'd be surprised if it wasn't in the t&cs.

But had I taken out a 4 year loan my repayments would have been higher and it is only now that an option to clear my balance has arisen arise so 4 years wasnt an option initially.

Any excuse not too pay is more common than my situation.

Im sure it is in the T&C's but no harm having a "moan" now and again especially when your trying to do the right thing and not avoiding paying it off like all togoether as is mentioned generally these days.:D