Fined for paying your loan early

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neil_g said:
quite a few loans have early payment fees not just student loans, why should they be any different?
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Not sure if it's all banks but lloyds charge 58 days of interest for early payment.

A way around this is if you're allowed to make over payments go into you're branch and pay the loan off apart from a token £20. When it has cleared phone up and ask for a settlement figure, they will then work out the 58 days interest on the £20 which is owed not the whole loans amount.

It worked for me :)
 
neil_g said:
its probably a whole another thread but while im sure a lot do use it to fund studying a lot more use it to fund their social life
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ding76uk said:
Where is your evidence for this?
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neil_g said:
i know/knew a lot of students/used to be one :D

otherwise wild speculation. id bet a small sum of money on it though.
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Neil's not wrong, I'm one of the "residential advisors" at Manchester, and you always know when the student loans arrive, due to the massive increase in drunken behaviour.

Where I am they seem to be getting bladdered every night :s
 
redddraggon said:
Neil's not wrong, I'm one of the "residential advisors" at Manchester, and you always know when the student loans arrive, due to the massive increase in drunken behaviour.

Where I am they seem to be getting bladdered every night :s
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My daughter was at Manchester a few years ago and I can confirm this, And I'm still paying for it now, :suspect::thinking:
 
Sounds crazy, but it was a way of levelling out the loan system as it can be seen to benefit high earners.

The new system means that you only repay your loan when you start earning a certain amount. and the amount you repay increases as you hit bigger earnings, meaning that at £25k income you would pay 3% of your income towards the loan, but earn £50k and repay 9% of your income to the loan. Interest rates increase as well, IIRC, s the higher earners pay more interest. but because they repay more of the capital element due to the higher earnings and the higher %age that they pay towards the loan means they will pay it off faster and actually pay less interest than a lower earning graduate. Lots of people think this is not fair, as the lower earner pays more (though some could argue it is an incentive to earn more...) so by making people pay early setllement fees it levelled the playing field so that the graduates who could (in theory) afford to pay more interest actually did so through the repayment penalties.

Anyways this has been scrapped so it is kind of irrelevent, but just wanted to point out that it was not quite as crazy thing as it sounds. Though the whole student loans and repayment system is complicated.

I must add this all comes from listening to Martin Lewis on 5Live earlier today, so may not be 100% accurate, if you need to know exact details then do some more research.
 
Rolyratman said:
Not sure if it's all banks but lloyds charge 58 days of interest for early payment.

A way around this is if you're allowed to make over payments go into you're branch and pay the loan off apart from a token £20. When it has cleared phone up and ask for a settlement figure, they will then work out the 58 days interest on the £20 which is owed not the whole loans amount.

It worked for me :)
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Depends on the bank, and when the loan was taken out, but this generally has stopped. It was a system called the rule of 78, which was quite a complicated method of workign out settlement figures. IIRC finance house now have to use a more accurate and favourable (to the customer) system of working out settlements, but in general your "pay all bar £20" scheme is not a bad one to beat the system.
 
neil_g said:
its probably a whole another thread but while im sure a lot do use it to fund studying a lot more use it to fund their social life
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I hate how people have this incredibly incorrect view on what students spend their loans on.

Me and most of my friends actually have to pay MORE than my maintenance loan for our accommodation, and work for money to "fund our social lives", I for one am £200 worse off every loan day.

The odd person, whose parents don't earn much or have split up may get non-repayable grants which will leave them with a few hundred left over on loan day after paying rent, which yes they may go out with - but that really is a small minority of people, because of how tight student loans are with giving out grants.
 
thorton said:
Well you can see wrong I'm afraid, most don't even get a maintenance loan that covers their rent, and work to get money to pay the rest and for nights out.
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Err, I'm a student, I live with students, what I see is not wrong.
 
redddraggon said:
Err, I'm a student, I live with students, what I see is not wrong.
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Well this is it, pigeon holing all students saying they get too much just because of a certain group is hardly fair - if I were to get less money off student finance for my loans I would be screwed, as plenty of my mates would be up here. I hardly ever go out because I can't afford it (I can count on one hand the amount of nights out I've had this year) and I don't get any extra grants because my parents earn over the cap, and somehow that means that student finance think they throw money at me.
 
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The whole system is deeply flawed, and this just adds a further point as too just how flawed it is.

For example, assuming someone takes maximum loan, and inflation runs at 3% over the 30 years, someone eating an average of £30k over those 30 years would never repay the loan. You need to earn £41k, on average to repay your loan. After 30 years any balance is written off, so why do you want to put those people who want to repay early off?
 
The government should ban all penalty fees for early repayment of debt. You pay the creditor for the use for their money, for as long as you want/need it, just like hiring anything else.
 
MartynK said:
The government should ban all penalty fees for early repayment of debt. You pay the creditor for the use for their money, for as long as you want/need it, just like hiring anything else.
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The problem with that is the company you borrow the money from will more than likely borrowed it from someone else, in bulk, and they still pay exactly the same charges and interest so they have the same cost level regardless. The early repayment charges are there to make sure the finance house don't lose money if someone does repay early.
 
lawrie29 said:
The problem with that is the company you borrow the money from will more than likely borrowed it from someone else, in bulk, and they still pay exactly the same charges and interest so they have the same cost level regardless. The early repayment charges are there to make sure the finance house don't lose money if someone does repay early.
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but thats their commercial risk. same as they take the risk if someone doesn't repay at all
 
boyfalldown said:
but thats their commercial risk. same as they take the risk if someone doesn't repay at all
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You could argue that, and if there were no early repayment charges, then the overall cost of lending would increase for everyone to take into account the possibility of some customers repaying early. So you could say that by having early repayment charges for the people that do repay early keeps the cost of lending down for everyone else.
 
thorton said:
I hate how people have this incredibly incorrect view on what students spend their loans on.

Me and most of my friends actually have to pay MORE than my maintenance loan for our accommodation, and work for money to "fund our social lives", I for one am £200 worse off every loan day.

The odd person, whose parents don't earn much or have split up may get non-repayable grants which will leave them with a few hundred left over on loan day after paying rent, which yes they may go out with - but that really is a small minority of people, because of how tight student loans are with giving out grants.
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sorry, but another one here that agrees with neil. I spunked all my loan on ale and entertainment - most of my friends did the same.
 
Most people know some students Will spend money on drink etc, but as a student most of my money goes on travel to get there and i Don't drink. So its unfair to put everyone in the same bag
.
 
joescrivens said:
sorry, but another one here that agrees with neil. I spunked all my loan on ale and entertainment - most of my friends did the same.
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AS did I and all the peeps I knew! Hence the reason we never went out at the end of term as we had no money left! :lol:
 
joescrivens said:
sorry, but another one here that agrees with neil. I spunked all my loan on ale and entertainment - most of my friends did the same.
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starkersclark said:
AS did I and all the peeps I knew! Hence the reason we never went out at the end of term as we had no money left! :lol:
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Don't know how you do tbh. I end up £200 down every loan day because of my accommodation (which is on the cheap side for Huddersfield), as do most people that I know up here - apart from some whose parents don't earn much so they get given grants.
 
joescrivens said:
sorry, but another one here that agrees with neil. I spunked all my loan on ale and entertainment - most of my friends did the same.
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When did you go Joe? 9K tuition fees?

Ever thought that most people work to get the money to go out with? The loans do not cover the tuition and rent. But hey ho you can go thinking it is all a doss rather than do some basic mathematics.

Really I don't see that debt will be wiped up when it gets there in 30 years, it will create a multi million/billion pound hole to be filled by whoever is in power by then. They may as well make it free in the first place rather than make them pay off for 30 years ten write it off. Or they will change the goalposts on the whole deal and chase your children, then your children's children until the debts are paid in full.
 
ding76uk said:
When did you go Joe? 9K tuition fees?

Ever thought that most people work to get the money to go out with? The loans do not cover the tuition and rent. But hey ho you can go thinking it is all a doss rather than do some basic mathematics.
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The tuition fees are irrelevant. I didn't have as much but therefore I didn't need to borrow as much. I still had the same amount of spending capital as students these days after they have paid their tuition fees.

Student life is a great time and very easy life. 10 to 15 hours a week I had of actual lecture time, the rest of the time I dossed around and had fun. I worked too, to fund more drinking and partying.

When the loan money hits the bank, it's a great week of living like a king! Then the rest of the term eating beans on toast :lol:
 
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