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What is a capital repayment holiday?

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When you borrow money or take a loan, lenders charge interest on the loan amount that you borrow from them to cover the costs of providing that loan to you. Lenders often call that original amount borrowed as “capital”.

When you repay the loan, each repayment amount constitutes both an element of the capital that you borrowed from the lender as well as an interest element in respect of that capital.

During a capital repayment holiday, you will only be charged interest on your outstanding loan balance during that holiday. You will not be making capital payments during this holiday. This means that the amount of your outstanding loan balance/capital will remain the same. However, it also means that more capital will be outstanding for longer (as you will be extending the length of the loan) so you will ultimately pay more interest over the term of the agreement.

How long can I take the capital repayment holiday for?

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Capital Repayment Holidays are for three months, with a review period at the end of this. The term of your loan will be extended by three months and you will need to continue to make interest payments during this holiday. Failure to make an interest payment agreed as part of a Capital Repayment Holiday may adversely affect your credit score. For more information on late payments and impact on your credit score, see attached: www.experian.co.uk/consumer/guides/late-payments.html

When will the capital repayment holiday start?

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Details of the start date of the repayment holiday are within the side letter sent to you.

Do I need to cancel my Direct Debit?

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No, there is no need to cancel your direct debit.

Where can I obtain further help and guidance if I require it?

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Here's a list of agencies that can offer help and guidance in relation to controlling debt; Please note that this list is not exhaustive and that some debt management companies may charge you a fee for their services. You should understand all of the fees involved before entering into any agreement.

Business DebtlineFree, confidential and independent advice for self-employed people and small businesses.www.businessdebtline.org
0800 197 6026
Citizens Advice BureauA registered charity that provides advice on a wide range of matters including debt service. For debt advice throughout the UK check Yellow Pages for your nearest Bureau under 'counselling and advice'.www.citizensadvice.org.uk (England and Wales)
www.cas.org.uk (Scotland)
www.adviceguide.org.uk for further advice
Debt arrangement scheme (Scotland)Government-run debt management tool which allows someone in debt to repay their debts through a debt payment programme (DPP). Only available to people in Scotland.www.dasscotland.co.uk
0131 263 0245
Local Housing AuthoritySome Local Authorities offer in-house money advice centres. Check with your Local Authority for further information.www.gov.uk
Money Advice ScotlandMoney Advice Scotland has details on its website of advice agencies throughout Scotland who provide free, independent, impartial advice.www.moneyadvicescotland.org.uk
0141 572 0237
National DebtlineA national telephone helpline for people with debt problems in England, Wales and Scotland. They will discuss your debt problems with you and the options available to you.www.nationaldebtline.org
0808 808 4000
PayplanPayplan provide free debt advice and free debt solutions for anyone experiencing financial difficulties, whatever the circumstance or situation.www.payplan.com
0800 280 2816
ShelterA charity that works to alleviate the distress caused by homelessness and bad housing in England, Scotland and Wales. They give advice, information and advocacy to people in housing need.www.shelter.org.uk
0808 800 4444
StepChange Debt CharityA registered charity whose purpose is to assist people in financial difficulty to provide free, impartial and realistic debt advice.www.stepchange.org
0800 138 1111


I have more than one loan with Esme, does the capital repayment holiday apply to all of them?

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Yes, we will automatically apply the capital repayment holiday to all your Esme loans once you have made the initial request, unless you have otherwise stated.

Will it impact my credit score/profile file if I take a repayment holiday? 

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Your credit file will not be impacted by taking an agreed repayment holiday. However, failure to make an interest payment agreed as part of a Capital Repayment Holiday may adversely affect your credit score. For more information on late payments and impact on your credit score, see attached: www.experian.co.uk/consumer/guides/late-payments.html

Will I fall into arrears on my loan by taking a payment holiday?

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No, you will not fall into arrears by taking a repayment holiday.

Can I make a payment during the three months payment holiday if my circumstances change?

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Yes, you can make a payment at any time and it won’t impact your repayment holiday.

How much interest will I be charged during my capital repayment holiday?

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We will confirm the amount of interest you will need to pay in the side letter you will receive. The amount of interest due will be the same each month of the capital repayment holiday as the outstanding balance of the loans stays the same for the duration of the holiday.

Why would you still charge interest during this period?

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Esme Loans is charged a rate for the funding it receives. This funding is then extended to our customers in the form of loans. Interest is then charged to customers for taking these loans and the interest applies for the duration of the loan.

Is my interest rate going to change a result of the capital repayment holiday?

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No, your interest rate will not change as a result of your repayment holiday. Your interest rate will remain the same for the duration of the loan.

Is a capital repayment holiday right for me? 

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You will need to consider all information before deciding to take a repayment holiday. The term of your loan will be extended by three months and you will need to continue to make interest payments during this holiday. It also means more capital will be outstanding for longer (as you will be extending the length of the loan) so you will ultimately pay more interest over the term of the agreement. Alternatively, you can make overpayments at any time before your final repayment is due.

How do I repay the interest charged during my capital repayment holiday?

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Monthly interest should be paid as per the dates listed in the schedule of your side letter and payments should be made manually to the account details listed in your side letter.

We are looking at how we can take interest payments via Direct Debit but will be in touch with you if this is applicable to your loan.

I have changed my mind and no longer require a capital repayment holiday, what do I do?

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We understand that circumstances do change therefore if you no longer require a capital repayment holiday, please email us at accountsteam@esmeloans.com with your request and we will action accordingly.


Capital & Interest Repayment Holiday

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What is a capital & interest repayment holiday?

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When you borrow money or take a loan, lenders charge interest on the loan amount that you borrow from them to cover the costs of providing that loan to you. Lenders often call that original amount borrowed as “capital”.

When you repay the loan, each repayment amount constitutes both an element of the capital that you borrowed from the lender as well as an interest element in respect of that capital.

A capital and interest repayment holiday means you take a break from both your capital and your interest payments on your loan. At the end of your capital and interest payment holiday your monthly payments will be re-calculated and will increase to cover the additional interest accrued during the holiday period. Your loan term will be extended by the same period as your holiday.

It also means more capital will be outstanding for longer (as you will be extending the length of the loan) so you will ultimately pay more interest over the term of the agreement.