Definition
Early repayment charge
An early repayment charge (ERC) is a fee some lenders charge if you repay a loan before the agreed term ends. It typically equals one to two months' interest.
Example
Repaying a personal loan six months early triggers an ERC of £180, equivalent to two months' interest.
Common misunderstandings
- Not all lenders charge an ERC — check the terms before applying if you might want to repay early.