Avoiding ERC

bufferz

I have approximately £2200 left on a Santander loan, which I was going to pay off in full, only for them to tell me I would be charged 2 months payments as ERC. So, looking on their site I can make extra payments and reduce the term of the loan, so can I then pay, say £1900 as a lump sum and have the period reduced to 2 months (from the current 16), and avoid the ERC as it would naturally end in 2 months time? Is it that simple? And if it is, surely the bank would know what I'm up to? (Don't bank with them anymore)

[Deleted User]

Make an overpayment and let the next DD clear the remainder, minimising the ERC. Don't worry about reducing the term.

jonesMUFCforever

Are you sure it was 2 monthly payments or 2 months INTEREST?

Nearlyold

As above It'll be 2 months interest on full settlement. OP needs to check terms and conditions of their loan as some lenders will charge 2 months interest on partial or full settlement.

PixelPound

I have just done this with my Santander loan its 2 months interest on a full settlement, unless there is less than 12 months remaining and then its 1 month. No extra costs for partial repayments, they just ask whether you want to reduce the monthly amount or the term. They are open about this on the phone and I asked does partial payments incur extra interest and was told no. You may want to check your loan's T&C in case its changed.

I had £3k left and called up a couple of times to make partial payments, when the second time I was asked was it debit or credit card, after a nice chat I went away got a no fee 0%BT card and used an existing card to pay all but 2 months worth which I then BT'd. They send out a letter after partial payments showing the next and then future payments, so if you ensure you leave somewhere between 1 and 2 months balance the letter will show the next and then final payment.