What are early repayment fees?
Early repayment is when you pay off a proportion, or all, of your debt earlier than you are legally obliged to. Most business lenders allow early repayment in either full, part or both, but be wary as some lenders may charge early repayment fees.
How much are they?
There is no industry standard figure, instead each lender will have their own fees and charges set out in the agreement terms and conditions.
You can contact your lender to request a settlement figure anytime. This should outline the total balance outstanding, including any early repayment fees, less any interest rebates.
What is an early redemption charge?
Not all business lenders use the same language, but don’t let this cause confusion. The terms; early repayment charge, early redemption fee, early settlement fee and early repayment penalty are all the same thing.
Why would they do such a thing?
Just like most businesses, lenders want to make a profit. They likely have investors to please and targets to meet, so when you pay back your finance early, they recuperate the interest they lose by charging early repayment fees.
Do all lenders charge early repayment fees?
No. There are in fact a range of business lenders that do not charge early repayment fees whatsoever. If this is an important factor when taking out a business loan be sure to find out the terms and conditions regarding early repayment before accepting any business finance.
