Requesting A Settlement Letter To Close A Personal Loan From Private Non-Bank Lenders
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CashPal TeamLast updated 21 November 2025
Closing a personal loan with a settlement letter
Personal loans are a common part of everyday finance in Australia, with the average advertised unsecured rate around 14% per year. Many people want to close a loan early once they can afford it — but to close a personal or payday loan cleanly you need more than a rough app balance. A formal settlement letter gives you the exact payoff amount and protects you from surprise interest or fees later. This guide focuses on private non-bank lenders like CashPal.
What a settlement letter is and why it matters
A settlement letter (or payoff letter) is a written statement from your lender setting out the exact amount to close the loan on a specific date — outstanding principal, accrued interest to that date, and any early repayment or administration fees. Once you pay it correctly, the lender uses it to discharge the loan and close the account. Because loans accrue interest daily and may carry fees an app balance doesn’t show, a settlement letter prevents you underpaying (leaving the account open) or overpaying (chasing a refund).
When and why to request one
You request a settlement letter when you want certainty about the figure to close the loan:
- You plan a lump-sum payment to repay the loan early
- You are refinancing or consolidating the debt
- You are selling an asset that secures the loan
- You want written proof of the final payoff amount
How to request one from a private lender
Under the National Credit Code (within the National Consumer Credit Protection Act), you can write to your credit provider at any time and ask for a statement of the amount required to pay out the contract as at a date you specify. The lender must provide this in writing within a set timeframe and may charge a small fee.
Requesting your payoff figure
With a private non-bank lender the process is usually simple — a clear three-step approach works well.
- 1
Contact the lender
Use the official channel (phone, email or secure portal) and say you want a settlement letter or loan payout figure.
- 2
Give the details
Provide your full name, loan account number and the date you intend to pay, so they calculate an accurate payoff amount.
- 3
Get it in writing
Ask them to send the payout letter in writing, and keep a copy of your request and their reply for your records.
What to expect in the letter
Formats vary, but a good settlement letter should show enough detail to understand the payoff:
- The outstanding principal balance as at the calculation date
- Accrued interest to the proposed settlement date
- Any early repayment fees or administration charges
- The total payoff amount required to close the loan on that date
- Payment instructions, including account details and the reference to use
- A clear statement that paying that amount fully discharges the loan once funds clear
If any line item looks wrong or unclear, ask the lender to explain the calculation before you pay.
Steps to finalise and close the loan
- 1
Review the figure
Check the principal matches, the interest period lines up with the settlement date, and fees match your contract.
- 2
Make the final payment
Pay using the exact method and reference in the letter. Allow time for transfers so late arrival doesn’t accrue extra interest.
- 3
Request closure confirmation
After the payment clears, ask for a loan closure letter or final statement showing a zero balance. Keep it as proof of discharge.
- 4
Cancel direct debits
Cancel any automatic repayments once you have written confirmation the account is closed — they don’t always stop automatically.
Common issues, your rights and who to contact
Even with a settlement letter, traps exist. Paying after the date shown can add daily interest and leave a small residual balance. Some fixed-term loans include early repayment fees that eat into your savings — check both your contract and the letter. Errors can occur where the account has had arrears or hardship arrangements, so if figures don’t make sense, ask for a corrected payout figure and don’t transfer money until you’re satisfied. Private lenders offering personal loans must hold an Australian Credit Licence and comply with the National Consumer Credit Protection Act, overseen by ASIC. If your lender refuses a settlement letter, delays unreasonably, or includes unfair fees:
- Use the lender’s internal dispute resolution process and complain in writing
- If unsatisfied, lodge a complaint with the Australian Financial Complaints Authority, at no charge to you
- Use MoneySmart or a free financial counselling service for guidance on your rights
If a lender operates outside these frameworks or refuses to engage with AFCA, treat that as a red flag and seek legal advice or report them to ASIC.
Frequently asked questions
What is a personal loan settlement letter and why do I need one?+
A written statement from your lender showing the exact amount to close your loan on a specific date. You need it to avoid underpaying, overpaying, and leaving small residual balances or surprise fees.
When should I request one?+
When you plan to repay early, refinance or consolidate, sell an asset linked to the loan, or simply want a clear cost to finalise the contract.
How do I request one from a private non-bank lender?+
Contact the lender via their official channel, provide your full name, loan account number and intended payout date, and ask in writing for a settlement or payout figure. Keep copies of all correspondence.
What should I check before I pay?+
Confirm the principal matches, interest is calculated to the correct date, fees match your contract, and the letter clearly states that paying the listed amount will fully discharge the loan.
What if the lender refuses or the payoff figure looks wrong?+
Complain in writing through the lender’s internal dispute process, then escalate to AFCA if needed, and seek guidance from MoneySmart, a financial counsellor, or legal advice if the lender isn’t following Australian credit rules.
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