An early repayment charge (sometimes called an ERC) is an amount that may be payable if a business settles a loan before the end of its agreed term. It reflects part of the interest the lender would otherwise have earned over the remaining period.
When it might apply
Not every facility carries an early repayment charge, and where one exists it is usually defined by the agreement. Always check your own terms before settling early, as the position varies between products and lenders.
- Whether a charge applies, and how it is worked out, is stated in your agreement.
- Some facilities allow early settlement with no charge at all.
- Ask for a settlement figure so you can see the exact total to clear the loan.
Why charges like this exist
Lenders price a facility around the expected term. An early repayment charge is one way of recognising the shortened period, while still letting a business settle ahead of schedule if that suits its plans.
Credicorp lends only to UK limited companies and LLPs for business purposes and is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. We do not quote charge amounts here; request a current settlement figure from our team before repaying a Credicorp facility early.
See also: What is an early repayment charge (ERC)?, Are there fees for paying off my facility early? and The early-settlement charge, explained.