About the loan
What can the loan be used for?
The loan is regulated under the Consumer Credit Act 1974, and can be used to cover the costs of your case, including your solicitor's fees and any related disbursements (costs), such as barrister or forensic accountant costs.
You may decide to use Novitas for part of your costs and agree with your solicitor a different funding arrangement for the balance.
How does the loan work?
The loan is a pre-approved facility. The money is used as it is needed, with your approval, and paid directly to your solicitor to settle outstanding invoices and costs associated with your case. You do not have to use the entire loan amount and interest only accrues once the money is sent to your solicitor’s account.
So, while funding is always available, you only pay for what you use. You do not need to service the loan. The loan is repaid at the end of your case from your settlement. The loan contract is between you and Novitas.
Your solicitor has an obligation to communicate to us any material facts that may affect repayment of the loan during your case and to pay off the loan from any proceeds received as part of your settlement. The remaining amount will be passed on to you. This is a fully recourse loan, which means that you, the borrower, are always responsible for repaying the money borrowed.
How much does the loan cost?
Our charges are transparent and straightforward. The set-up fee is £500 (or 1% of the facility if the loan amount is above £50,000). This can be added to the loan or paid up front. Interest is accrued only on the money you use, and calculated at a fixed rate of 18% per annum or 1.5% per month (not compounded).
It is due only when your case is complete and at loan settlement. We take the annual interest rate of 18% (1.5% per month), multiply by the amount you have used from your facility and divide by the number of days it has been drawn down.
For example, if you use £10,000 for 6 months, you will pay back interest of £900. There is no minimum loan period, no early repayment charges, and no minimum interest charge. Independent legal advice is typically circa £300 (and cannot be added to your loan). This is required to ensure you fully understand all the implications of the loan arrangements. Representative example: Total Amount of Credit: £50,000 Total Charge for Credit: £12,131, includes:
- £300 Independent legal advice (estimate)
- £612 setup fee (£500 set up fee plus £112 interest)
- £11,219 loan interest (assumes full loan amount drawn down on day 1)
Rate of interest: 18% per annum (fixed) Duration: 15 months Total Amount Payable: £62,131 Representative APR 19.5%
How long do I have to repay the loan?
We agree a time period for each loan, often based on an event such as the sale of a property or a settlement. While we put a time period of 12 months on the loan contract from the date of the agreement, we understand that this needs to be flexible and will roll on the loan on a 30-day basis according to your individual situation.