early redemption fees

[meatismurder]

I took a loan out 2 years ago with firstplus for 15 thousand plus 3 thousand payment protection insurance. I am now in the position to pay the loan off so I asked for a early redemption quote. They have quoted me 100 pounds more than the original loan. Now I,ve paid 4 and a half thousand pounds off that loan over the last 2 years. Is this right? Can they actually do this?

[lady_p_gold]

Well it all depends on what the interest rate was. I suppose its a bit like a mortgage, you can pay it for four years and then its only gone down by about a hundred quid. Have you got the original documents ???

[bednobs]

of course they can ... loans are not meant to act like credit cards - ie, you can pay them off when you want to, they are meant to be paid over the set amount of time at a set amount each period. if you wanted flexible borrowing, you get a credit card, if you want a low rate, you get a loan. you cant really have both im afraid. You will probably also find it says that (in better words) in your loan agreement.

[buildersmate]

I guess you could check the numbers to see they have calculated it right - but there is either a fixed early redemption fee in there somewhere or a different interest rate applicable in the event you repay early (or both). It will be specified in the T&Cs of your loan agreement.

[Dassie]

Read the small print. Yes you might have paid off �4500 but in the earlier years of a loan the majority of what you pay goes towards the interest and not the capital amount. You signed a contract and the lender was expecting to get x amount of interest as a profit on his business transaction. There is probably a clause about early redemption in your contract.

[kujawski]

hi,

i had the same problem with first plus, they are the biggest waste of space ever,

i borrowed 25k and after 3 years i got settlement figure of 43k, whats all that about, well they add all the payment protection onto the amount for the full term of their load, if it is redeemed, as well as an early redemption fee, etc etc,

thank god im not with them anymore, even their interest rate was (from what i remember 10.9%)

[Oneeyedvic]

Since the amount you have borrowed is less than �25,000 the redemption charges are actually worked out in accordance with the law - they have no choice in the matter.

So the figure they have given is in all likelihood an accurate figure.