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 pay for disbursements, such as court issue fees, medical reports and GP records.
How does the loan work?
The loan contract is between Novitas and your client. The money is drawn down from the facility as it is needed and paid directly to your suppliers to reimburse them for costs associated with the case. Your client does not have to use the entire loan amount and interest only accrues once the money is sent to your client account. The loan operates on a no-win, no-fee basis, provided that the client continues with the claim until the conclusion of the court case. Where the claim is successful, the loan amount will be recovered from the opponent. An After the Event (ATE) insurance policy is put in place from the start to cover the loan repayment if the case is not successful.
How much does the loan cost?
There is no minimum loan period, no early repayment charges and no minimum interest charge.
If the client case is unsuccessful, the loan is repaid from an insurance policy. If the case is settled, the loan is repaid from the settlement award.
Our charges are straight forward and transparent:
- An administration fee of £60 for each of the first three amounts drawn down from the loan. This is taken directly by Novitas and added to the amount drawn down
- Interest rate is between 15.3-30.3% per annum and calculated on a simple basis, i.e. there is no compounding of interest. Interest only accrues on money drawn down from the loan facility.
- Interest is calculated by taking the annual interest rate, multiplying by the amount used and dividing by the number of days it has been drawn down. For example, if the client has drawn down £6,000 for 12 months at 15.3% annual interest rate, they will pay back interest on the £6,000 of £1,156
- Recent legal precedent may make a proportion of the interest recoverable from the other side. This is not guaranteed however so assume that the interest is to be repaid from the settlement.
- The non-recoverable element of the insurance policy.
If the claim is successful, the amount we lend will be recovered from the opponent. If the claim is unsuccessful it is covered in full by a Legal Expense Insurance Policy and the client will not be liable to repay the loan.
What is the duration of the loan?
The agreement has no fixed duration but will last at least 12 months. It will end once all sums due are repaid.
Does the client have to have insurance?
Yes. Every claim must have ATE insurance in place to cover the loan amount where the claim is unsuccessful. We work with several A-rated insurers who provide coverage for all civil litigation claim types within the funding scheme. This insurance is arranged by the solicitor.