Loan providers must allow you to pay back a personal loan in full before the end of the loan term or make partial overpayments. If you have savings, it almost always makes sense to use these to pay off any loans.
However, if you’re paying back more than £8,000 a year, you’ll usually have to pay an early repayment charge (ERC). This can vary, but is typically equal to around one or two months’ interest – you can find this information in your loan agreement.
If there’s more than a year on your loan agreement to go, the maximum ERC would be 1% of the amount being repaid early or 0.5% if you’re in the final year.
If you want to repay your loan in full, ask your lender for a ‘settlement statement’. This will show how much you need to pay to clear the debt, and how much you’ll save by repaying early.
Find out how to create a repayment plan for your borrowing.