# Do fixed rate personal loans have redemption penalties?



## Banking2006 (24 Feb 2008)

_ Moderator note:

This has been moved from a Best Buys thread_

Some banks/ providers offer promotions re. fixed rate loans (especially re. finance for motor vehicles) and offer no penalty clauses if repayment of part/ full loan is made early. 

Currently Bank of Ireland (6.9%) [broken link removed] is in this category. 

It's easy to check with the specific provider's terms/ conditions to see what penalty will apply (or call them directly to confirm if any confusion).


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## Brendan Burgess (24 Feb 2008)

*Re: Unsecured variable rate personal loans*

Hi Banking2006

A fixed rate loan without an early repayment penalty is a great product. I can't find it on the Bank of Ireland site. Everywhere I look, I see the warning "You may have to pay a penalty if you pay off a fixed rate early". 



Brendan


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## Banking2006 (24 Feb 2008)

*Re: Unsecured variable rate personal loans*

As i said in my post- you need to confirm exactly what is meant by the 'penalty'. Ring BOI 1890 365 365 and they'll tell you that at the moment they apply no penalty but in the future may do so if cost of money increases etc- and their track record over recent years has been to apply no penalty if the loan is repaid off early. This compares particularly favourable to that offered by Halifax which guarantees to charge you 3 months penalty interest if you repay early- i don't know what happens with Tesco etc


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## GeneralZod (24 Feb 2008)

*Re: Cheapest variable rate personal loans?*

I believe Ulster Bank offer fixed rate personal loans without early repayment penalties.

That's what they told me last year when I took out a loan. This link appears to [broken link removed] that.

It says this 

     Quote:


> Avail of attractive rates with no arrangement fees or _early redemption penalties_.


my italics.


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## Brendan Burgess (25 Feb 2008)

*Re: Unsecured variable rate personal loans*

Thanks

I had missed that. 

I suppose I would like to see it in the terms and conditions of the loan to be sure. Can you check the documentation you got with your loan? 

Brendan


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## demoivre (25 Feb 2008)

*Re: Unsecured variable rate personal loans*



Banking2006 said:


> As i said in my post- you need to confirm exactly what is meant by the 'penalty'. Ring BOI 1890 365 365 and they'll tell you that at the moment they apply no penalty but in the future may do so if cost of money increases etc- and their track record over recent years has been to apply no penalty if the loan is repaid off early. This compares particularly favourable to that offered by Halifax which guarantees to charge you 3 months penalty interest if you repay early- i don't know what happens with Tesco etc



Tesco doesn't apply exit penalties. See here.


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## GeneralZod (25 Feb 2008)

I checked through the Ulster Bank loan agreement that I signed and it does not explicitly state anywhere that there are no early repayment penalties. The closest the T&Cs (regulated by Consumer Credit Act, 1995) gets is 



> Structured Fixed Rate Loan Agreement Terms & conditions
> 
> 9. You can settle this agreement at any time by giving notice in writing and paying the amount you owe under the agreement which may be reduced by a rebate.



Tesco loans are provided by RBS/Ulster Bank so similar terms might be expected between the two.


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## Brendan Burgess (25 Feb 2008)

Thanks Demoivre

Tesco certainly highlight that fixed rate loans are better because the rate can't go up and that there are no repayments for paying them off early. 

I will have to go back to the drawing board on the Best Buys Tables.

Banking 2006

Thanks for raising this very important issue.

Brendan


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## John Rambo (25 Feb 2008)

Tesco do allow early repayment but it has to be done in one go. The BOI loans seem to be causing confusion. All of their literature and even their TV ad specifically state that early repayment may result in penalties. This is very ambiguous and perhaps means managers have discretion at a local level. either way, I don't think it's fair to equate it to the Tesco product. UB have been known to contact would be customers of Tesco and offer better terms...there was a thread on this a while back.


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## dave2k (25 Mar 2008)

Sorry to bring up an old thread but it appears that BOI outline the fees here:

[broken link removed]
in the event of early repayment of the loan in whole or in part for any reason, or conversion to a variable interest rate, or other fixed rate within the initial fixed rate period or any further or subsequent fixed rate period, the Borrower shall pay a sum to be calculated in accordance with the following formula (Amount x (R-R1) x Time) divided by 36500 and for the purposes of this formula, the variables are defined as follows: 'Amount' means the average balance of the amount repaid early or converted from the date of repayment or conversion to the end of the fixed rate term, allowing for scheduled repayments;​


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