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Paying off a loan early?

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  • 22-10-2008 5:35pm
    #1
    jack_pearse
    Registered Users Posts: 120 ✭✭


    This might be a silly question but have never taken a loan before....
    I am taking out a variable APR loan over 5 years with my building society. However I am expecting I will have money tp pay pay it off in about 2 years.
    There are no exit fees...

    My question is if I pay it off early, say within 2 years, I presume that I will not be charged interest for the 5 years, just the 2 years that I actually had the loan out for?

    Thanks
    Jack


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    #2
    IsThatSo?
    Closed Accounts Posts: 988 ✭✭✭IsThatSo?


    Nope, there are no interest charges/penalties on clearance of on a variable loan.

    Its only if it was a fixed loan that you may have to pay a penalty, or pay the outstanding interest.

    You should be good :) but do read your T&C carefully all the same. You can always confirm with the lender also.


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    #3
    Kila
    Registered Users Posts: 436 ✭✭Kila


    Just keep an eye out on your loan account after you've made your "final" payment.

    I had a BOI loan which I paid off early. After I transferred the remaining amount from my current account to my loan account (paying it off in total), I rang to check if I needed to do anything to close the account. They said no, it would be fine.

    Later that month, though, there was a -55 (or similar) showing on my loan account. Turns out that my last payment cleared the total amount due, but that interest for that month (or part thereof) had already been calculated and had been applied on the account. So I had to transfer in a little more money to the account (and then write a letter to them confirming account closure).

    So, basically, just keep an eye on your loan account when you finish to make sure you don't end up owing interest that you don't know you owe!


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