Settlements ERC Explainer
Understanding your ERC can be confusing. Our ‘Settlement Early Repayment Charge’ video will help you break this down offering you clarity.
For many reasons you may look to settle you loan Evolution loan before the end of your contractual term. This could be due to a sale of a property, re-mortgage or a further consolidation loan, among other reason.
If you require a settlement, you can either e-mail the team directly or give us a call to request. Your settlement is made-up of three main components:
- Outstanding, principal and fee
This is the current outstanding amount you have left to pay off the initial principal amount borrowed and these were charged.
- Accrued interest
This is the amount that has fallen due in daily interest since the date of your last payment due to the date of the settlement request.
If you are in arrears this will also include the interest element of this.
- ERC
This is your early repayment charge. This is 28 days from the date of the settlement generation, plus a further one month’s interest.
These three components will make up the settlement amount you would be required to pay to settle your loan in full.
The settlement will be 28 days from the date the settlement was produced.
Don’t worry if a monthly contractual payment is taken during 28 days before you settle this amount should be refunded back to you.
It is important to remember that each regular payments that you make will be distributed between the three components of principal, interest and fee.
At the beginning of your loan a high proportion of the payments you make will be paid towards the interest you owe on your loan and a minimal amount to your principal borrowed.
The fees will be split for the same amount throughout the term of your loan.
Over the duration of your loan the payment split between interest and principal will become equal, until you begin to pay off more to the principal than the interest.
This can be why the settlement figure can be seen as high when requested earlier in the loan, as only a small amount may have been apportioned to paying off the principal and fee amount.
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For a typical loan of £30,000.00 over 120 months with a variable interest rate of 19.56% per annum, your monthly repayments would be £598.34.
Including a Product Fee of £2,400.00 (8% of the loan amount) and a Lending Fee of £807.00, the total amount repayable is £71,800.20.
Annual Interest Rates ranging from 11.88% to 29.38% (variable). Maximum 50.00% APRC. The loan must be paid back by your 70th birthday. Read more.
Think carefully before securing debts against your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
