Customers have the right to make full or partial repayment (“early settlement”) of a credit agreement at any time and the right to a reduction in the total cost of credit (including interest) that corresponds to the amount that has been repaid for the duration of the agreement.
There is no minimum early settlement amount or maximum number of partial early payments which may be made.
Where the amount of the early repayment exceeds £8,000, lenders are entitled to compensation for costs provided that such repayment falls within a period for which the borrowing rate is fixed. The compensation cannot exceed 1% of the amount repaid early, or 0.5% if the outstanding period of the loan is less than one year. Lenders must disclose the early settlement compensation to the customer in both the pre-contract information and the actual credit agreement.