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    • bufferz
    • By bufferz 7th Mar 18, 10:05 AM
    • 33Posts
    • 9Thanks
    Avoiding ERC
    • #1
    • 7th Mar 18, 10:05 AM
    Avoiding ERC 7th Mar 18 at 10:05 AM
    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)
Page 1
    • zx81
    • By zx81 7th Mar 18, 10:10 AM
    • 17,288 Posts
    • 18,403 Thanks
    • #2
    • 7th Mar 18, 10:10 AM
    • #2
    • 7th Mar 18, 10:10 AM
    Make an overpayment and let the next DD clear the remainder, minimising the ERC. Don't worry about reducing the term.
    • jonesMUFCforever
    • By jonesMUFCforever 7th Mar 18, 6:10 PM
    • 24,883 Posts
    • 12,072 Thanks
    • #3
    • 7th Mar 18, 6:10 PM
    • #3
    • 7th Mar 18, 6:10 PM
    Are you sure it was 2 monthly payments or 2 months INTEREST?
    What goes around - comes around
    give lots and you will always receive lots
    • Nearlyold
    • By Nearlyold 7th Mar 18, 6:27 PM
    • 1,070 Posts
    • 900 Thanks
    • #4
    • 7th Mar 18, 6:27 PM
    • #4
    • 7th Mar 18, 6:27 PM
    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.
    • nic_c
    • By nic_c 7th Mar 18, 6:49 PM
    • 1,531 Posts
    • 840 Thanks
    • #5
    • 7th Mar 18, 6:49 PM
    • #5
    • 7th Mar 18, 6:49 PM
    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.
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