Can You Pay Back Your Provident Loan Early & Reduce The Interest?
If you are wondering if you can pay your Provident loan up early and reduce the interest you pay, then you will find the answer on this page. We will tell you how to pay up your Provi loan early and if it makes any difference to the amount of money you have to pay back in total. By the end of this article you should have a clear understanding of paying off Provident loans and the benefits of doing so.
Provident are one of the UK’s most popular doorstep lenders. They have been giving out loans for many years now and although they do sometimes come in for some bad press, they are seen as a well established reliable company. The main reason why Provident get negative feedback is due to the amount of interest they charge on loans. So today we are going to tell you how you can reduce the amount of money you actually pay back.
Paying Up A Provident Loan Early
When you apply for a loan with Provident you are given a choice of term, in other words, how long you want to pay the loan back in. The standard agreements tend to be 31 weeks, or 50 weeks. However you can get shorter terms and you can even get a loan over 106 weeks in some cases. One of the advantages of borrowing money from Provident is that they have fixed rates. In other words if you do not pay your money back on time you will not incur any hidden interest charges, although it may affect your chances of getting a loan again in the future.
Although you agree to pay the loan back over a set period of time, there is nothing to stop you paying the loan back early. As an example you may take out £300 over 50 weeks, the weekly repayment on this is £10.50, but you may want to pay £15 a week. This is not a problem, in fact the agent that visits you will be more than happy for you to do this as it increases their commission. Paying a little extra a week will mean that you pay the loan up in less than 50 weeks. You may in some cases be paying weekly and then come into some money, if this is the case you can settle your loan in one lump sum. Again this will result in the loan being paid off early. If you do this though, does it affect the amount of interest you have to pay back.
How To Reduce The Interest You Pay Back
Although Provident offer fixed rate loans, if you do pay the loan back early you do not have to pay the full amount of interest. Back a few years you would pay the amount in full and then a few weeks later your agent would return with a rebate, or a set amount of money for paying the loan off early. These day’s it works slightly differently. If you wish to pay your loan off early, simply ask the agent how much it would be to settle the loan. On their clip in front of them they have two figures, one is the total outstanding debt and one is the ESB or early settlement balance. The ESB is the total amount you have to pay if you settle the loan on that particular day. This figure changes from week to week.
It’s a complicated formula for working out how much less you will have to pay. But basically the quicker you pay back the loan the less you will have to pay. If you are paying say £300 interest on a loan but pay the loan up after just a few months, then you could save well over £100, in some cases even more. Each week the amount you pay back increases, so the sooner you pay back your Provi loan the less interest you will be paying back.
Although borrowing from Provident can be quite expensive due to the high interest rates, if you do have the opportunity to pay back the money early then it is well worth doing so. Next time your agent calls ask how much the ESB figure is, or simply how much it would cost to settle the loan there and then. You may be pleasantly surprised at the answer.