Overpayment on Loans.

  • adamazi's Avatar
    Can I make overpayments on a loan and is there any penalty for doing this? I want to take out a loan and am wandering if I can make regular overpayment so as to finish paying it off early.
  • 5 Replies

  • Verified Answer

    ScottW's Avatar
    Employee
    Verified Answer
    Hi 

    You can make overpayments to your loan at any time, and there's no penalty. When you make an overpayment, it can be used to reduce the overall term of the loan or how much you pay on a monthly basis, and it can also result in an additional interest rebate. You can make extra payments over the phone or online by using the account details for the loan, if you apply and are successful.

    We'll always send out a letter telling you how the payment has impacted the loan as well.

    Hope that helps!
  • tewkesbc's Avatar
    Hi, When you a make an extra payment does the interest rebate come later? I have just paid £380 and was told on the phone that the interest would also reduce but can only see the £380 has come off the overall amount. Thanks
  • ScottW's Avatar
    Employee
    Hi , thanks for your question! Interest rebates are calculated and applied manually by our Payments team, so they don't appear immediately on your account. It should usually take no more than five to seven working days for the rebate to be applied to your account and then a letter will be sent out to confirm your loan adjustment.

    If it's been more than seven working days since you made your payment, please call our Loans team directly on 0345 600 6016, available 8am - 10pm during the week and 9am - 5pm at the weekend.
  • DL68's Avatar
    Is there a limit as to the amount an overpayment can be? i.e. as a percentage of remaining balance before settlement penalty would apply?
  • heanor_man_34's Avatar
    Guest
    Good afternoon . Having had a look here: tescobank.com/loans I've found this: Can I pay my loan back early?Yes. But you will be charged up to two months' interest if you choose to settle your loan early. And from the FAQs on The Community: Can I make additional payments to my loan? Yes, you can make additional payments to your loan. How you do this depends on when you took out your loan.
    Loan applications made on or after 11 June 2010
    You can choose for your additional payment to be applied in one of two ways:
    • Reduce your monthly payment and keep the term of your loan the same, or
    • Keep your monthly payment the same and reduce the term of your loan.
    Both options will give you an interest rebate, which means you will pay less interest overall on your loan, but you will get a greater interest rebate with Option 2. Please call us on 0345 600 6016* to tell us which option you prefer before making your payment. If you want it to be applied in the same way every time you make an additional payment, we can leave a note on your file so you don't have to call us every time you make a payment. I would suspect that you could pay a significant amount off as an additional repayment before it would be classed as settling your loan early, for example: if you had £1,000 left and a pending Direct Debit for £100 and repaid £900 in addition to the Direct Debit. Whilst the contact centre is busy helping people during the current situation I would personally call the team and see if they can provide any additional advice.

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