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Paying off a loan early

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  • 26-03-2009 9:44pm
    #1
    watna
    Closed Accounts Posts: 10,367 ✭✭✭✭


    Hi all,

    I have a loan with AIB. I think there’s another year worth of repayments left but I have the money and want to pay it off today.

    I rang banking support (I’m in NZ so due to the time difference it can be difficult to get in touch with my branch) to ask them how to go about this. She said I’d need to call my branch and get a balance on it and that I would have to pay off the interest I would have paid for the next year. I presumed they would give me a closing statement with the interest due since the last time I paid any until the day I closed the loan but she seemed to think I’d have to pay the extra interest I would have paid.

    That sounds a bit strange to me. Why would anyone pay off the loan early if that was the case?

    I’m going to call the bank but due to the time difference I can’t do that until 11pm tonight (it’s not 10am here).

    Just thought I’d see if anyone has any experience of this to reassure me before I call the bank. It’s a normal AIB personal loan.

    Thanks!


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    #2
    BankMan
    Closed Accounts Posts: 143 ✭✭BankMan


    Generally speaking, you're penalised for paying loans off early if they're arranged on a fixed rate, although some lenders also charge an admin fee of around €25 to pay a variable rate loan off early too, either way it may be worth arguing with them - they may waive if you ask nicely :D


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    #3
    watna
    Closed Accounts Posts: 10,367 ✭✭✭✭watna


    BankMan wrote: »
    Generally speaking, you're penalised for paying loans off early if they're arranged on a fixed rate, although some lenders also charge an admin fee of around €25 to pay a variable rate loan off early too, either way it may be worth arguing with them - they may waive if you ask nicely :D

    Thanks for that. I can't for the life of me remember if it is fixed term or variable and the paperwork is in Ireland.

    Guess I'll see that they say and try and sort something out.

    I know they technically lose money by me paying it off early but you'd think, with the times we live in that they would be happy to have loans paid off - instead of me claiming I cannot meet the repayments - which seems to becoming more common, sadly.


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