Can I pay a lump sum to lower repayments?

joekirkup (1 year ago)

Hi Guys, My name is Joe and I recently took a loan from your company FLM Loans. It helped me get through a period in my life which wasn’t exactly economically sound! For which I am grateful! Now I have managed to get back on my feet and have saved and extra £1500 to pay towards my loan. Is it possible to pay this lump sum and therefore lower my monthly repayments? I am 23 and about to become a first time father and having such monthly payments looming over me makes a massive grey cloud of uncertainty follow as I’m sure you can imagine. Please can you advise me if this is an option? What other options do I have with you? Kind regards

FLM Loans (8 mths ago)

Hi Joe,

Thanks for contacting FLM via the answer centre. This is an interesting point that as far as I know has never been raised before.

We do encourage early repayment and are the only lender that we know of that doesn't charge fees for early payment and which charges interest daily.

The fact that you have overpaid your loan means that your balance has gone down dramatically, which will mean that the amount of interest that you pay monthly will be reduced massively, and the payments that you make every month will go more towards paying off your balance and less towards paying interest. 

Overall you will have less payments to make before your loan is cleared, I don't have access to your account right now but at a guess paying off £1500 on a £3000 loan might save you 2 years worth of repayments.

If you want to keep the same number of payments but have a longer term and a smaller monthly payment amount (instead of keeping the same payment amount but reducing the number of months) the only way to do this is to pay off your loan by taking out a new loan for a smaller amount.

This is called a 'Top Up' loan because most people use it to repay their loan and borrow more, but you can use it to repay and borrow the same amount as your current balance (a lot less than your original loan) over a longer term, with a lower monthly repayment.

You can apply for a top up on-line by logging in to the 'my account' section. You will need to have made 12 monthly repayments in a row without going into arrears. As long as your situation and your guarantor's situation is similar to what it was when you first applied the top up loan application will definitely be approved.

Hope that helps.

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