You also do not have to pay the full balance of the settlement. Under the Consumer Credit Regulations 2010 which stem from the EU, you are also entitled to pay back some of the amount due. This is called a partial settlement, so that you as a consumer can pay back the amount in chunks.
When you pay back the loan amount you will be paying some of the interest due as well as the capital borrowed. When you receive the figure you might think that it is more than you anticipated, but this is because it includes interest on the capital you borrowed.
Lenders have to show the numbers
The good thing about the key facts documents that come with loan agreements today is that they have to include an early settlement section. This shows how much you will have to pay back as an early settlement at different stages of your loan. You will be given the figure when a quarter, half and three quarters of the loan have been paid. This gives you a clear indication of the figures that the early settlement will be.
Can I trust the numbers?
Lenders have to provide the correct figures, however if you donít feel that they are right, you can contact Citizens Advice. They will then contact trading standards once they have the correct documentation from you.
For the best advice on this speak to Citizens Advice, this guide is just for informational purposes but it is not legal and you should consult with qualified advisors before you make any decisions.