Early Repayment Fee Confusion on Natwest Loan Holiday Payments Arrears Arrangment

DomK1234

Hi All,
I have a natwest personal loan. I took the six months payment holiday. Understandably, they are now asking for me to arrange to do something about the arrears.
I wanted the option of just adding the six months to the end of the loan term. 
However, they want me to sign up to this arrangement and they cannot/will not give me an indication of the early repayment fee. They have told me I can find this out once I've signed up.  So, at the moment, if I pay off the full loan it will cost me something like £70, and before signing up to this new arrangement I wanted to know how much, very roughly, it might cost me if I pay the loan off early. They won't give me any indication whatsoever. Which seems like it's putting people in an impossible position. 'Sign up to this new arrangement to accommodate your arrears but we won't clarify if this arrangement will cost you more, or how much more it will cost you, if you want to repay early.'
Am I missing something? I've never taken out a loan or mortgage without an understanding of this. How can Natwest get away with that?

Jeremy535897

I suspect not. See:
https://www.financial-ombudsman.org.uk/businesses/complaints-deal/mortgages/early-repayment-charges

DomK1234

Thanks Jeremy. You suspect not...that they should be making it clear?

Jeremy535897

I mean that I suspect that Natwest cannot get away with not setting out the ERC terms. The item I posted is more about new mortgages than rescheduling personal loans, hence my caution, but I don't see why the principles won't apply. Try pointing them to the link and see what Natwest say.

DomK1234

Will do, thank you. 

HobgoblinBT

Under the Consumer Credit Act, the maximum early repayment on a personal loan is 28 days interest for loans with 12 months or less outstanding, or 2 months interest if the remaining term is more than 12 months.  I suspect NatWest, like most lenders charge the maximum permitted under the law.  

Thrugelmir

HobgoblinBT said:

Under the Consumer Credit Act, the maximum early repayment on a personal loan is 28 days interest for loans with 12 months or less outstanding, or 2 months interest if the remaining term is more than 12 months.  I suspect NatWest, like most lenders charge the maximum permitted under the law.  

Until redemption of the loan is applied for the early settlement fee is a total variable. The lender isn't going to commit to a fixed number, as it cannot. 

DomK1234

I specifically wasn't asking them to commit to a fixed number, I just wanted to be given some idea of what it might be and if and how it might vary from what I already have with them. It sounds like what I have with them is the two month thing, and that will also apply to the new arrangement. Why on earth didn't they just say?

Thrugelmir

DomK1234 said:

I specifically wasn't asking them to commit to a fixed number, I just wanted to be given some idea of what it might be and if and how it might vary from what I already have with them. It sounds like what I have with them is the two month thing, and that will also apply to the new arrangement. Why on earth didn't they just say?

Probably the customer adviser was just responding to the questions you were asking. They've no idea what you do or don't know. The two month charge is clearly laid out in the contractual paperwork for every loan. The fact was that they couldn't provide you with a number. Nor is it there role to calculate one. This would have to be undertaken by a different team entirely. 

DomK1234

Every loan or mortgage I've taken out the lender has been able to give me 'some idea' of the early repayment fees/arrangement. As I've already said I wasn't asking them for a calculation, I was asking for 'some idea'. 

Marcio45

Hi
I have a Natwest loan and have asked for a 3 month payment holiday at the start of the pandemic.
So when the three months came to an end i got an email/letter asking if i wanted to pay a lump sum of the arrears or add it to main balance which would make the instalments go up and extra cost for interest. The end date of the loan would stay the same as the original loan, hence the instalments going up.
If you choose to pay the arrears you dont have any extra cost on top. The balance goes to the level if should have been had there not been a payment holiday.
Are you actually asking about the charges for paying the loan in full or the arrears in full (the 6 months worth of instalments)?
Any extra payment to the loan other that settling payment holidays due to Covid will cost 56 days interest of the amount paid.
Lets say you owe 10k and interest rate of 12% (1% monthly). To clear the 10k you will need to pay the 56 days interest (lets do 2 months just to make it easier), so thats 2% of 10k = £200. So to pay the loan in full it would cost £10200.
Does this make sense?