Yes, you will be charged up to two months’ interest if you choose to settle your Loan early.
Although your repayment amount is fixed for the duration of your loan, the way that we allocate each monthly payment between the loan capital and the interest varies throughout the term. At the start of the loan, a higher proportion of your monthly repayment is allocated to repaying interest. However, as you start to make more repayments, we allocate less of the monthly repayments to repaying interest and more towards reducing the capital until your loan is completely repaid. This is known as the actuarial method.
Therefore the early settlement fee of up to two months interest will vary in amount according to the size and duration of your loan at the time you choose to settle.
To settle your loan call 0345 600 6016* and we’ll confirm your early settlement payment amount. The settlement amount will include the early settlement fee and any interest rebate you’re due.