Interesting scenario occurred with me in January. Took out a personal loan a while back to buy a motorbike, was paying it off happily for many years and suddenly got a call in January to say "you're behind on your payments". This seemed odd, because it was on a debit order. Apparently I was underpaying the minimum amount for about 8 months, which again, is odd, because it's a debit order they arranged, not me. Anyway, raised this with them and they agreed it was a mistake and offered (pushed me) to kill the personal loan in 4 months (as opposed to the 12 remaining) and they would reduce the total from $3700 down to $1100. It doesn't make sense from a settlement balance perspective.

On paper, it all seems good, but what I am confused by is why they would do this. There must be a screw up on their side they are trying to cover up, because no bank is going to willingly cut the amount you owe by $2,600. They also cancelled the loan immediately and put a payment plan in place which seems like a strange sense of urgency to get rid of the problem.

Any ideas as to why they would do this?

Someone is about to get crucified by the royal commission and wants to stick it to the bank before they do?

This is the bank doing it though so not sure how they could stick it to the bank?

similar thing happened to me- except when i rang them after receiving the text messages saying my payments are late, told me i needed to increase my repayment amounts (which was set up by them to start with) and i also owed an additional $120 or something that was the shortfall of a few years payments that werent enough.

Paying off 8 months early means less interest charged. Also, given they were not deducting the right amount to pay off the loan they would have been charging you extra interest. Perhaps they've decided to reverse that interest because it was caused by their mistake. We don't know the size of the loan or conditions, but it seem unlikely those 2 things would amount to $2600 difference. It seems like they are trying to make a problem go away. You have 2 choices:
1. be happy and accept it; or
2. go back over your loan history, payments made, interest and fees charged, conditions, and make sure they are not ripping you off (maybe they should really be giving you 3200 off the loan instead of 2600)

Personally, I would be choosing option 2...

bank error in your favour, do not pass Go

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Saffer said..
This is the bank doing it though so not sure how they could stick it to the bank?

I meant like a disgruntled bank employee.

Just a word of warning... remember the 'if it sounds too good to be true' rule. ...and just make sure that you are dealing with the right enitity, paying your loan off or giving your bank details to sombody else will not satisfy your loan with the bank.

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PaulWA said..
Just a word of warning... remember the 'if it sounds too good to be true' rule. ...and just make sure that you are dealing with the right enitity, paying your loan off or giving your bank details to sombody else will not satisfy your loan with the bank.

It is the same bank. Checked that.