Paying off a credit agreement early

This advice applies to England. See advice for See advice for Northern Ireland, See advice for Scotland, See advice for Wales

When you pay off a credit agreement early, under the Consumer Credit Act the total amount you pay is reduced.

If you’re still within 14 days of signing the credit agreement, find out how to cancel a credit agreement instead. 

If you have any other debts work out which debts to deal with first. You might have priority debts and these are more important.

Check your agreement is covered by the Consumer Credit Act

You can check your credit agreement to find out if it’s covered by the Consumer Credit Act. If it is, it should say so at the top of the first page.

The following types of agreements are usually covered by the Consumer Credit Act:

  • personal loans

  • credit cards

  • payday loans

  • hire purchase

  • catalogues

  • store cards

  • store finance and ‘buy now pay later’ agreements

It doesn’t matter if it was arranged face to face, over the phone, by mail order, or through the internet or digital TV.

You can speak to an adviser if your agreement isn't covered or you're not sure - contact your nearest Citizens Advice.

Tell the lender you want to pay the loan off early

Write to the lender and ask them to tell you the total amount you must pay to clear the loan in full, this is called an 'early settlement figure'. 

The lender must tell you the amount you need to pay in full. How much interest you have to pay depends on how much of it you've paid already.

You’ll then have 28 days from when they received your request to pay the amount off in full.

Just because you asked for an early settlement figure doesn’t mean you have to go through with it. You can choose to carry on with your usual payments instead.

If you only want to pay off part of the loan

The savings of interest and charges will be less than if you pay off the loan in full.

You should:

  • tell the lender in writing that you intend to pay off part of the loan

  • ask how much your payment will reduce the total loan amount and future payments - you might be able to pay the same amount each month over a shorter period instead

  • make the payment within 28 days

If you need help

If the lender doesn't reply when you ask for an early settlement figure or you think they’re charging you too much contact your nearest Citizens Advice for help. 

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Page last reviewed on 20 February 2020