These days there is no one without having debt in the kitty to be paid off. Life throws opportunities to own things and those too big things like a house or commercial property or even a vehicle.
For some other people and some financial crises, the need to take a loan becomes inevitable. Such as:
- Medical emergencies
- Car breakdown payments
- A rent hike
- Unannounced travel mandate from the company to reimburse next month
Now, for all these circumstances, the loan servicing as repayment of the principal amount with interest is crucial.
Not only for the clearing of the debt from one’s shoulders but also for gaining a good credit report.
The present repayment manner of a loan determines the future capability of a person to avail again of any debt.
Thus, one cannot emphasize enough about the importance of making timely repayments.
However, what about the bright circumstance when one borrower intends to repay the entire loan amount early???
EARLY REPAYMENT OF LOANS
The process of early repayment of loans has a method to be complied with and applied for the same.
Anyone can make a request or a written application for the early repayment of loans.
Once the lender receives this request, an amount is given to the borrower to be paid known as an early settlement amount.
For this, a time duration of 28 days will be given within which this whole amount will have to be paid.
EARLY REPAYMENT FEE
The manner of payment of this ERF is calculated in this manner:
If the time is less than 12 months left on loan: then about 28 days interest can be charged from the day of the borrower letting them know of the early repayment.
If the time is more than 12 months left on loan: then about 58 days interest can be charged from the day of the borrower letting them know of the early repayment along with the accrued interest amounts.
For further details, one should check the credit agreement to clear any doubts.
The persistent aspect of this is that a cost will have to be paid for the same known as early repayment fee or ERF.
Some lenders do charge ERC while some others don’t, but this is just something that a lender mentions.
Nevertheless, the fact is that, for early repayment, ERC of up to 58 days interest will mandatorily have to be paid, no matter what.
BENEFITS OF EARLY REPAYMENT OF LOANS
The main benefit of early repayment of loans is that the borrower will receive a rebate equivalent to the difference between the total remaining projected cost of the loan and the amount paid till this time.
In other words, a borrower will save money in terms of interest payments if he has a minimum of two months left for the whole repayment.
Sometimes a person due to severe financial circumstances may have defaulted many times in his debt repayments.
In addition, this has adversely impacted his credit score not to enable him to gain funding assistance of any kind.
For such people, making use of bad credit loans in Ireland is the best solution.
Bad creditworthiness is not a very big factor to deny finance and the loan options are too many to mention in terms of repayment flexibility and amounts.
Anyone troubled with temporary cash crunch can make use of this funding as they are readily available by a few clicks in the online lender’s website.
These unsecured loans are payable within the very same day once the lenders have cleared all the formalities.
Many exemptions in terms of collaterals, guarantee, and bad credit is provided in these loan schemes.
WHY THE REQUIREMENT TO PAY EARLY REPAYMENT FEE???
When a lender gives its funds as small loans in Ireland, it calculates the interest that it will receive throughout the loan, whether it is for five or fifteen years.
However, once a person applying for the early repayment of loans, they lose out funds because of interests, which is a wholesome amount.
Therefore, to compensate this, banks and lenders charge early repayment fees.