# What “no early repayment fee” actually means

*Source: https://credicorp.co.uk/support/what-no-early-repayment-fee-means/*

“No early repayment fee” is a genuinely good feature, but it is often misunderstood. Some borrowers assume it means there is nothing to gain from paying early; others assume early repayment is somehow penalised. Neither is true with us. This article explains what no early repayment fee actually means and how settling early saves you money.

## The plain meaning

“No early repayment fee” means exactly what it says: if your company chooses to repay the loan ahead of schedule, we do not charge a penalty or fee for doing so. Some lenders, on some products, charge an early-settlement fee — an extra cost simply for clearing the debt sooner than agreed. We do not. There is no charge for paying early.

So you are free to repay early whenever it suits the company, without worrying that doing so will cost you anything extra. You can read our short answer to this in [can I pay my loan off early](/support/can-i-pay-my-loan-off-early/).

## Why early repayment saves you money

Here is the part that makes it worthwhile. On our loan, interest accrues over the time you actually have the money. The total amount payable shown on your Key Information Sheet (KIS) assumes you run the loan for the full term. If you repay sooner, you have borrowed for less time — so there is less interest to pay.

That reduction is delivered through an **interest rebate** (sometimes called a rebate of charges). In simple terms, you do not pay the interest that would have accrued over the period you no longer hold the loan. You repay what you have borrowed, plus the interest up to the point of settlement, rather than the full term’s interest. The earlier you settle, the more you save. Our detailed explanation, with how the saving is worked out, is in [early repayment: how and what you save](/support/early-repayment-how-and-what-you-save/).

## How a rebate works, in practice

Suppose a company takes a short-term loan over the full term but finds it can clear the balance partway through, when an expected payment arrives early. Because there is no early-repayment fee, the company is not penalised for settling. Because of the interest rebate, it pays interest only for the shorter period it actually borrowed, not the full term — so the total it pays is less than the original total amount payable.

This is an illustration of the principle, not a quote — your figures are on your KIS, and the exact amounts depend on your loan and when you settle.

## Getting a settlement figure

To repay early, you ask us for a **settlement figure**: the exact amount needed to clear the loan in full as at a given date, with the rebate already applied. Because interest stops accruing once the loan is settled, the figure is tied to the date you pay. The process is set out in [how do I get a settlement figure](/support/how-do-i-get-a-settlement-figure/). Always settle against an up-to-date figure rather than guessing, so the loan is cleared cleanly.

## What it does not mean

To be clear about the limits: “no early repayment fee” does not mean the borrowing is free, and it does not erase interest that has already accrued for the time you have held the money. You still pay back what you borrowed plus interest up to settlement. What it does mean is that paying early is always to your advantage — you save the future interest, and you are charged nothing for the privilege of clearing the debt sooner.

## The takeaway

No early repayment fee is a borrower-friendly feature with a simple upside: if the company can clear the loan early, it should, because it will pay less interest and face no penalty for doing so. If you think you may be able to settle ahead of schedule, ask us for a settlement figure and clear it — there is genuinely no reason not to.

---

Credicorp Limited — UK lender to limited companies (Company No. 16093826). credicorp.co.uk