Requesting A Settlement Letter To Close A Personal Loan From Private Non-Bank Lenders

Personal loans are a common part of everyday finance in Australia. Recent analysis suggests that the average advertised interest rate for unsecured personal loans is around 14 percent per year, with some borrowers paying well above that depending on their credit profile. With higher rates and cost of living pressure, many people want to close a personal loan early once they can afford it.

To close a personal or payday loan cleanly, you need more than a rough balance from an app. A formal personal loan settlement letter gives you the exact payoff amount to clear the debt and protects you from surprise interest or fees later. In this guide we’ll explain how it works, focused on private non-bank lenders like CashPal.

What Is A Settlement Letter And Why It Matters

A personal loan settlement letter, sometimes called a payoff letter, loan payout figure or debt closure letter, is a written statement from your lender. It sets out the exact amount you must pay to close a personal loan on a specific date, including an outstanding principal, accrued interest up to that date and any early repayment fees or administration charges.

Once you pay that payoff amount correctly and on time, the lender uses it to complete your personal loan discharge and close the account.

This matters because personal loans usually accrue interest daily and may have fees that do not show clearly in a simple app balance. Without a settlement letter, you risk underpaying by a small amount and leaving the account open, or overpaying and then having to chase a refund.

When And Why You Should Request A Settlement Letter

You request a personal loan settlement letter when you want certainty about the figure needed to close a personal loan. Common situations include:

• You plan to make a lump sum payment to repay the loan early
• You are refinancing or consolidating the debt into another product
• You are selling an asset that secures the loan
• You want written proof of the final payoff amount for your records

Even if you are not ready to pay out the loan immediately, asking for a loan payout figure can help you understand what loan finalisation in Australia would cost and whether early repayment fits your budget.

How To Request A Settlement Letter From A Private Lender

Under the National Credit Code, which sits 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 your credit contract as at a date you specify. The lender must give you this payout figure in writing within a set timeframe and may charge a small fee for the statement.

With a private non bank lender, the process is usually simple. A clear 3 step approach works well:

1. Contact the lender through the official channel such as phone, email or secure portal and say you want a personal loan settlement letter or loan payout figure.
2. Provide your full name, loan account number and the date you intend to pay the loan so they can calculate an accurate payoff amount.
3. Ask them to send the request payoff letter in writing, such as by email or secure message, and keep a copy of your request and their reply for your records.

Putting the request in writing is important. It creates a clear trail and makes it easier to escalate a complaint later if the lender delays or refuses to provide a proper statement.

What To Expect In A Personal Loan Settlement Letter

Each lender has its own format, but a good personal loan settlement letter should give you enough detail to understand exactly how the payoff amount was calculated. In most cases, you can expect:

• 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 personal loan on that date
• Payment instructions, including account details and the reference to use
• A clear statement that payment of that amount will fully discharge the loan once funds have cleared

If any line item looks wrong or unclear, ask the lender to explain the calculation before you pay. A reputable private lender should be able to show you how interest and fees have been applied and provide an updated figure if your settlement date changes.

Steps To Finalise And Close The Loan

Once you have the settlement letter, you can move from planning to closing the account.

Review The Settlement Figure

Read the letter carefully. Check that:

• the principal matches your expectations
• the interest period lines up with the settlement date
• any early repayment fees match what is in your contract

Make The Final Payment

Pay the payoff amount using the exact method and reference details in the settlement letter. If you are paying from a different bank, allow enough time for the transfer to arrive, since delays can cause extra interest to accrue. Some lenders state that if payment reaches them after the nominated date, a small balance may remain.

Request A Loan Closure Confirmation

After the payment has cleared, ask for a loan closure letter or final statement showing a zero balance. Many banks and private lenders treat this as a standard part of their loan discharge process, but it is worth requesting specifically. Keep this document safely. It is your proof that the debt closure letter confirms the personal loan discharge is complete.

Cancel Any Direct Debits Or Standing Orders

If you had automatic repayments set up, cancel them once you receive written confirmation that the account is closed. Lenders warn that direct debits do not always stop automatically when a loan is paid out, so cancelling them yourself avoids overpayments.

Common Issues And What To Watch Out For

Even with a settlement letter, there are traps that can cause frustration when you try to close a personal loan.

One issue is timing. If you pay after the date shown in the letter, extra daily interest can be added. That can leave a small residual balance which may cause the account to stay open or even lead to default fees if you ignore later notices.

Another issue is early repayment fees. Some fixed term personal loans include fees for paying the loan out early. If these are high, they can eat into the savings you hoped to get from early repayment. Always look for these in both your original contract and the settlement letter.

Errors can occur, especially when the account has had arrears, hardship arrangements or multiple changes. If the figures in the letter do not make sense, ask for a corrected loan payout figure and do not transfer money until you are satisfied it is right.

Finally, remember that you are not alone if something goes wrong. The Australian Financial Complaints Authority reported more than 100,000 complaints in the 2024 to 25 financial years, with over 54,000 of these relating to banking and finance products such as loans and credit. Personal loans are among the common drivers of disputes. That statistic reinforces the need to read every line of your settlement documents and ask questions early.

Your Rights And Who To Contact For Help

Private lenders that offer personal loans must hold an Australian Credit Licence and comply with responsible lending rules and disclosure obligations under the National Consumer Credit Protection Act and the National Credit Code. These frameworks are overseen by the Australian Securities and Investments Commission.

If your lender refuses to provide a personal loan settlement letter, delays unreasonably, or includes what you believe are unfair fees in the payoff amount, you have options:

• Use the lender’s internal dispute resolution process and make a formal complaint in writing
• If you are not satisfied, lodge a complaint with the Australian Financial Complaints Authority, which can resolve many loan disputes at no charge to you
• Use government resources such as the MoneySmart website or contact a free financial counselling service for guidance on your rights

If the lender operates outside these frameworks or refuses to engage with AFCA, treat that as a red flag and seek legal advice or report the lender to ASIC or your state consumer protection agency.

Final Thoughts On Closing A Personal Loan

Closing a personal loan should be simple, not stressful. With average unsecured personal loan rates near 14% a year, making sure your loan finalisation in Australia is accurate and properly documented can protect your wallet and your credit record.

A clear personal loan settlement letter gives you the exact payoff amount, prevents surprise charges and serves as proof that the debt is fully discharged. If a lender makes that process difficult, the Australian regulatory framework and dispute bodies are there to back you up.

As a direct Australian lender, CashPal offers straightforward small personal loans with transparent costs and clear paperwork, so when you are ready to close a personal loan you can request a settlement letter that sets out your payout figure, any remaining fees and the steps to finalise the loan with confidence.

What is a personal loan settlement letter and why do I need one?

It is a written statement from your lender that shows the exact amount needed 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 a personal loan settlement letter?

Request one when you plan to repay the loan 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 a settlement letter 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 personal loan settlement or payout figure. Keep copies of all correspondence.

What should I check in the settlement letter before I pay?

Confirm the principal matches your expectations, 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 can I do if the lender refuses or the payoff figure looks wrong?

You can complain in writing through the lender’s internal dispute process, then escalate to the Australian Financial Complaints Authority if needed, and seek guidance from MoneySmart, a financial counsellor, or legal advice if the lender is not following Australian credit rules.