Compare secured loans by early repayment fees
Easy exit? Perhaps. Let's see how lenders charge you for paying off your loan ahead of schedule.
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Early Repayment Charges Explained
Paying off your loan early should feel like a win - but with secured loans, it can come at a price. Early repayment charges (ERCs) are often hidden in the small print and vary quite a bit between lenders. If there's even a chance you'll repay ahead of time, it's wise to compare ERCs upfront - not just interest rates.
Let's break down what to look for and how to avoid the heavier fees.
What early repayment charges cover
ERCs aren't random - they're there to protect the lender's expected earnings from the interest you'd pay. When you repay early, they lose out on that money, so they charge you to make up the shortfall.
Key things ERCs might include:
- A flat fee (e.g. £250 or so) regardless of when or how much you repay
- A percentage of the remaining balance (usually 1–5%)
- A fee that reduces the longer you've had the loan
- Penalties for overpaying beyond a certain limit
- Charges applied even if you're remortgaging to a new lender
When ERCs might make sense
Even if there's a fee involved, don't assume it's a deal-breaker - it just needs to be weighed against the bigger picture and your goals.
Early repayment might be worth it if:
- You're clearing the debt entirely and saving more in interest than the ERC costs
- You've come into money (e.g. inheritance or sale proceeds)
- You're switching to a cheaper loan, even after fees
- You're preparing to sell your property
- Your personal circumstances have changed and flexibility matters more than cost
How to compare ERCs on secured loans
Lenders don't always make their ERCs obvious. But you have the right to enquire and make sure it works well alongside the interest rate.
Tips for comparing ERCs:
- Ask for the total cost including ERCs if you repay in year 1, 3, 5, etc.
- Check if partial overpayments are allowed without triggering a fee
- Find out if the fee is fixed or on a sliding scale
- Ask whether the ERC applies during a fixed-rate period only
- Consider getting help from a broker - they can flag which lenders are stricter
Summing up
Early repayment fees are one of the most overlooked costs in secured lending - but they can make a big difference. Whether you plan to repay early or just want the option, it's vital to compare ERCs alongside rates, fees, and loan terms. The more you know now, the less you'll pay later.
Frequently Asked Questions: Secured Loans
Are early repayment fees standard on secured loans?
Yes, most secured loans do include ERCs, especially during the initial fixed-rate period. The fee compensates lenders for the interest they expected to earn over the full term. Even if the lender doesn't highlight it upfront, ERCs are often buried in the terms, so it's best to ask directly before signing to avoid unexpected costs later.
Are early repayment fees standard on secured loans?
Yes, most secured loans do include ERCs, especially during the initial fixed-rate period. The fee compensates lenders for the interest they expected to earn over the full term. Even if the lender doesn't highlight it upfront, ERCs are often buried in the terms, so it's best to ask directly before signing to avoid unexpected costs later.
Are early repayment fees standard on secured loans?
Yes, most secured loans do include ERCs, especially during the initial fixed-rate period. The fee compensates lenders for the interest they expected to earn over the full term. Even if the lender doesn't highlight it upfront, ERCs are often buried in the terms, so it's best to ask directly before signing to avoid unexpected costs later.
Can I overpay without a fee?
In many cases, yes. Most lenders allow partial overpayments of up to 10% of your loan balance per year without penalty. This can help you reduce interest and clear the debt faster without triggering ERCs. But if you go beyond that limit - or repay the loan entirely - you may face a fee. These terms vary widely between lenders, so always check what's allowed.
Can I overpay without a fee?
In many cases, yes. Most lenders allow partial overpayments of up to 10% of your loan balance per year without penalty. This can help you reduce interest and clear the debt faster without triggering ERCs. But if you go beyond that limit - or repay the loan entirely - you may face a fee. These terms vary widely between lenders, so always check what's allowed.
Can I overpay without a fee?
In many cases, yes. Most lenders allow partial overpayments of up to 10% of your loan balance per year without penalty. This can help you reduce interest and clear the debt faster without triggering ERCs. But if you go beyond that limit - or repay the loan entirely - you may face a fee. These terms vary widely between lenders, so always check what's allowed.
Can I overpay without a fee?
In many cases, yes. Most lenders allow partial overpayments of up to 10% of your loan balance per year without penalty. This can help you reduce interest and clear the debt faster without triggering ERCs. But if you go beyond that limit - or repay the loan entirely - you may face a fee. These terms vary widely between lenders, so always check what's allowed.
Can I overpay without a fee?
In many cases, yes. Most lenders allow partial overpayments of up to 10% of your loan balance per year without penalty. This can help you reduce interest and clear the debt faster without triggering ERCs. But if you go beyond that limit - or repay the loan entirely - you may face a fee. These terms vary widely between lenders, so always check what's allowed.
Are ERCs the same on all secured loans?
No, ERCs can vary from one lender to another. Some charge a set percentage that decreases over time, while others apply a fixed flat fee regardless of how long you've had the loan. A few lenders waive the fee entirely after a set period. It's crucial to look beyond the headline numbers and compare ERC terms directly.
Are ERCs the same on all secured loans?
No, ERCs can vary from one lender to another. Some charge a set percentage that decreases over time, while others apply a fixed flat fee regardless of how long you've had the loan. A few lenders waive the fee entirely after a set period. It's crucial to look beyond the headline numbers and compare ERC terms directly.
Are ERCs the same on all secured loans?
No, ERCs can vary from one lender to another. Some charge a set percentage that decreases over time, while others apply a fixed flat fee regardless of how long you've had the loan. A few lenders waive the fee entirely after a set period. It's crucial to look beyond the headline numbers and compare ERC terms directly.
Are ERCs the same on all secured loans?
No, ERCs can vary from one lender to another. Some charge a set percentage that decreases over time, while others apply a fixed flat fee regardless of how long you've had the loan. A few lenders waive the fee entirely after a set period. It's crucial to look beyond the headline numbers and compare ERC terms directly.
Are ERCs the same on all secured loans?
No, ERCs can vary from one lender to another. Some charge a set percentage that decreases over time, while others apply a fixed flat fee regardless of how long you've had the loan. A few lenders waive the fee entirely after a set period. It's crucial to look beyond the headline numbers and compare ERC terms directly.
Is it worth paying off a loan early even with fees?
It depends on the numbers. If the interest you'd save by repaying early outweighs the ERC, then it could still be a smart move. This is especially true if you've come into money or are remortgaging to a much better deal. But you should always crunch the number fully, including the total cost saved versus the penalty. A broker can help with these comparisons if you're unsure.
Is it worth paying off a loan early even with fees?
It depends on the numbers. If the interest you'd save by repaying early outweighs the ERC, then it could still be a smart move. This is especially true if you've come into money or are remortgaging to a much better deal. But you should always crunch the number fully, including the total cost saved versus the penalty. A broker can help with these comparisons if you're unsure.
Is it worth paying off a loan early even with fees?
It depends on the numbers. If the interest you'd save by repaying early outweighs the ERC, then it could still be a smart move. This is especially true if you've come into money or are remortgaging to a much better deal. But you should always crunch the number fully, including the total cost saved versus the penalty. A broker can help with these comparisons if you're unsure.
Is it worth paying off a loan early even with fees?
It depends on the numbers. If the interest you'd save by repaying early outweighs the ERC, then it could still be a smart move. This is especially true if you've come into money or are remortgaging to a much better deal. But you should always crunch the number fully, including the total cost saved versus the penalty. A broker can help with these comparisons if you're unsure.
Can I avoid ERCs completely?
Sometimes. A small number of lenders offer secured loans with no ERCs at all - or limit them to a short fixed-rate period. These products are less common and may come with slightly higher rates or more restrictive lending criteria. But if flexibility is a priority - say, you plan to move house or refinance soon - it may be worth looking for these deals.
Can I avoid ERCs completely?
Sometimes. A small number of lenders offer secured loans with no ERCs at all - or limit them to a short fixed-rate period. These products are less common and may come with slightly higher rates or more restrictive lending criteria. But if flexibility is a priority - say, you plan to move house or refinance soon - it may be worth looking for these deals.
Can I avoid ERCs completely?
Sometimes. A small number of lenders offer secured loans with no ERCs at all - or limit them to a short fixed-rate period. These products are less common and may come with slightly higher rates or more restrictive lending criteria. But if flexibility is a priority - say, you plan to move house or refinance soon - it may be worth looking for these deals.
Can I avoid ERCs completely?
Sometimes. A small number of lenders offer secured loans with no ERCs at all - or limit them to a short fixed-rate period. These products are less common and may come with slightly higher rates or more restrictive lending criteria. But if flexibility is a priority - say, you plan to move house or refinance soon - it may be worth looking for these deals.
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