Early Repayment Charges 'Axed' for Green Deal Loans
Early Repayment Charges 'Axed' for Green Deal Loans Jun 17, 2014
The Green Deal Finance Company has removed early repayment charges on all future Green Deal Loans. This means consumers won’t be penalised if they decide to pay off their debt early, for example when selling their house.
Green Deal customers now have the ability to pay off their loan in full or in part at any time.
The Green Deal Finance Company is a not for profit organisation that was established to provide low cost finance Green Deal Plans. The organisation has been working with Government to try and simplify and improve the loan process following criticism from industry and consumers.
Money Saving Expert, Martin Lewis, highlighted the need to remove early repayment changes in his Blog last February. He explained:
"People should always be allowed to pay off their debts earlier with no charge if they choose to. Full stop. End of."
The scheme also came under scrutiny after the Advertising Standards Authority accused the Green Deal Finance Company of miss-selling, after the organisation announced that Green Deal Loans where the cheapest on the market – a claim found to be not true.
Changes to Repayments
The modifications for early repayments were announced on 16th May, giving further flexibility for new Green Deal customers.
However, anyone who has taken out a Green Deal Plan prior to this date could still get charged if they wanted to pay back sooner than scheduled.
Currently in excess of 2,500 plans are moving through the Green Deal Finance process – and there are concerns that these customers could still lose out. However Green Deal Providers (the companies that facilitate Green Deal Finance on behalf of customers) have been encouraged to waive early repayment fees for plans that have already been purchased. Under the Consumer Credit Act, Providers will be able to claim a level of compensation for any costs uncured as a result of any early payments.
Early Repayment Charges - The Previous Arrangements
For loans to be repaid over 15 years or more, the maximum charge is set at £6 for each year left on the loan, for every £1,000 repaid early.
Repaying £5,000 ten years early:
Using the example of a customer making an early repayment to clear an outstanding balance of £5,000 ten years early, the maximum fee would be £300.
The Green Deal Finance Company remains positive and feels that their latest modification will encourage more customers to invest in home efficiency services. Chief Executive, Mark Bayley explained:
"I am delighted that we are able to remove early repayment charges on Green Deal Plans at such an early stage in the life of the Green Deal. This action is in direct response to views raised with us, and will make Green Deal Plans an even more attractive, accessible and predictable proposition for energy saving home improvements."