Have you ever seen those words ‘early repayment charges apply’ and felt a twinge of anxiety at what they mean?
In this article we will clarify the meaning of this term and explain how to find flexible loans.
Loans with no repayment charge
You will find several loans on our personal loans table which have no early repayment charges attached to them.
What are early repayment charges?
You may be tempted to think that paying off your loan before expiry of the term sounds like a good idea. Before you take that leap beware, you could be due for penalty fees for discharging the balance early.
When comparing different loans, confusingly, you may find a variety of terms appear which all mean the same thing, to whichever loan they apply. Typically, these will be phrases such as:
early repayment charge
no early repayment penalties apply
early redemption fee
early repayment penalty
early discharge fee.
What are the costs due to me?
There is no standard amount you will pay but you can usually work out the charge, based on one or two month’s interest.
The amount you pay will be higher, the earlier in the term you repay the loan; this is because earlier in the loan term, the repayment constitutes a higher portion of the interest element of the total loan repayment figure.
The early repayment penalty can add a significant amount to your loan sum.
Can I avoid an early repayment charge?
Source a more flexible loan at the outset, if you think repaying your loan early is likely to be the case. It is advisable to check which loans have this clause in the terms.
You will still be liable for payment of an early discharge fee if you move an existing loan into a debt consolidation loan.
Compare early repayment loans with FreePriceCompare
At FreePriceCompare, we can match loans to your individual requirements. When you compare loans, the results will highlight the loans which are subject to an early repayment charge; it will also indicate how much this is.
When choosing your loan, it is wise to look at other influential factors such as the Annual Percentage Rate (APR) and your monthly repayment sum.
Is an early repayment charge likely to be applicable to the best loans?
This isn’t always the case; indeed, some of the lowest cost loans on the market do not carry early repayment charges; using our loans calculator, let us assist you to find these more flexible loans.
It is a good idea to read more…
Comparing loans: things to be wary of when comparing loans.
Loans guide: shop around and know in advance what to look out for.
Personal loan guide: a loan may be better for you than credit card borrowing.