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Original poster

Loan not used

11 replies

Scotblue · 13/02/2023 13:31

Hello,

I took out a loan last year for 20,000. It was to help my mother with the family home. 6 and half months later, the funds haven't been used. We are waiting to hear back from establishment to see if they deal with us. It's been 7 months and so far all we got was the run around. It's a complicated situation and that's the best information I can give.

I wonder if I should give back to loan. I could continue to save the amount of money that I am making in monthly repayments and maybe in a few months time if we ever make any progress I can go in for another loan and then it will be more manageable because it will be a lower amount. If that makes any sense.

So far I have 20,000 sitting in my bank account, going nowhere and making no progress and paying interest on that about every 3 months or so. I'm thinking about handing it back.

What do you think?

OP posts:
Original poster
Scotblue · 13/02/2023 13:36

If I was to give back the loan to the bank, would I get another loan in a few months time if I needed it, in a few months time.

OP posts:
hedgehoglurker · 13/02/2023 13:55

What are the terms of the loan?

Original poster
Scotblue · 13/02/2023 14:02

hedgehoglurker · 13/02/2023 13:55

What are the terms of the loan?

It was a 5 year loan to be paid monthly.

There a big document of terms and conditions that I only ever skimmed through. I don't think there is an early repayment charge but I can't be 100% sure and to be honest I can't be bothered to read all that crap.

OP posts:
MaoamAddict · 13/02/2023 14:04

The early repayment charge is likely to be equivalent to 58 days interest if it's a high street lender - standard terms usually

LordEmsworth · 13/02/2023 14:08

to be honest I can't be bothered to read all that crap

So you've signed up to a loan without reading the terms and conditions, and you can't be bothered to ring them and ask about a settlement cost? I am not going to tell you what I think, as this isn't AIBU.

Well it's costing you interest now. But in a few months' time the interest rate might be higher so it'll cost you more, and you might not be accepted next time you apply. Without knowing the key bits of info that you're reluctant to find out, it's impossible to say more than that

hedgehoglurker · 13/02/2023 14:09

I have to assume that prior to taking out the loan, the bank has made the main terms of the loan quite clear.

Have you asked the bank if you can repay early and if there is an early repayment charge?

andymary · 13/02/2023 14:37

Request an Early Settlement Quote for it from the bank.

If you've made like 6 monthly payments on it so far, then it should cost less than £20,000 to pay it back - as you don't normally have to pay the interest that you would have accrued if you if you kept it for the 5 years. So there will be less than £20k left to pay on it, meaning you'll have some money left over from the 20k to put into savings to start you off.

It will then show as being paid off on your Credit Report.

ACynicalDad · 13/02/2023 20:25

Look at the rate you took it out at and rates available today, they are pricey much higher now, if you think you will use it then holding on could be the best plan.

FawnFrenchieMum · 13/02/2023 20:31

andymary · 13/02/2023 14:37

Request an Early Settlement Quote for it from the bank.

If you've made like 6 monthly payments on it so far, then it should cost less than £20,000 to pay it back - as you don't normally have to pay the interest that you would have accrued if you if you kept it for the 5 years. So there will be less than £20k left to pay on it, meaning you'll have some money left over from the 20k to put into savings to start you off.

It will then show as being paid off on your Credit Report.

That’s not always true, as you usually pay the interest before the capital, so she may not have paid any of the £20k yet and may actually owe more then £20k right now.

FawnFrenchieMum · 13/02/2023 20:33

Personally I’d keep it as there is no guarantee that you will be approved again in a few months time.
Stick it in premium bonds and see if you can win some extra money, or a high interest savings account (I would have done this straight away tbh, not waited three months!)

BarbaraofSeville · 14/02/2023 07:26

You 'can't be bothered to read all that crap' but want others to advise/do research for you?

Whether it's worth paying it back early depends on the interest rate. If it's a high interest rate, paying it back will save you a lot of money.

If it's a low interest rate, you could actually profit from keeping it as loan rates used to be as low as 2.9% and you can now get over 4% in a fixed rate savings account.

Can you be bothered to find out?

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