Question: is this possible?

[Wish]

I was talking to a mate last night who’s looking to borrow £6,000 directly from his bank.
He says if he borrows £6,000 it’s something like 8.?% however if he borrow £8,000 it’s something like 5.?% He then plans to pay the £2,000 back straight away.

Is that even possible / legal ?
I’m not convinced his plan will work, but he’s sure.

[Edible Roadkill]

Yeah don’t see why not, although they’ll likely adjust the term and not the payment amount.

[Wish]

Really, I’m gobsmaked.

[Caddyshack]

Just check no penalties but unlikely. You can sometimes ask for the monthly payment to be either reduced to cater for the repayment or left the same to repay capital quicker.

The banks will know that probably less than 1 in 1000 punters every repay any capital early so it’s pretty harmless to them.

[Ryyy]

My brother did this,barring different numbers. He wanted to borrow x amount to put towards x he had to buy a car, loan company said he was okay to borrow full amount of car (for lower interest rate) and pay off what he had already to reduce the loan no penalty. When he rang to do this he was told that he had been misinformed but honored what was said so double check with the loan provider as the person he spoke to wasnt very happy about it

[clockworks]

I borrowed £15k from Tesco last October. 5%, 5 year term, £282 a month. Bought a pre-reg car for £22.6k, cash deposit of £7.6k. Dealer finance at the time was 8.9%.

I sold my old car privately, and paid off some of the loan. I made 4 more lump sum repayments, settling the loan in full in March when I down-sized my other car.

Everything was done on line by bank transfer. Really straightforward. The interest rate and monthly repayments stayed constant, with the term reducing each time. I could've reduced the monthly repayments each time if I wanted to, but that would have required phoning them and asking.

[550man]

Hi,

I am a finance lawyer. While this is not legal advice I thought I could share the following:

- is it legal: yea absolutely

- is it possible: this depends on the specific terms of the loan/finance agreement for the most part(while
Consumer finance law may be relevant this would more be in the case of misselling the finance or ambiguity in the contract). The key will be reading the contract and checking (a) whether there is any legal or statutory bar to you repaying early (a consumer loan should include the statutory repayment right in its terms) and any additional fee for doing so.

I would be surprised if there was an interest step up provision for early repayment, as this would usually be covered in any early repayment fee and may be an issue from a finance provider conduct perspective.

Best of luck

[snuffy]

I had something like this a few years ago, but the other way round.

A 15k loan was 7.9%, but under 15k and it was 4.9%. It worked out, over the term that it cost just over £200 more to borrow an extra quid!