Paying off a credit agreement early

If you decide to repay a credit agreement before the end of the term, the Consumer Credit Act allows you to reduce the total amount owed. This is because you won’t have to pay all the interest and charges that would have built up over time.

If you’re still within the 14-day cooling-off period, it may be better to cancel the agreement altogether — find out how to cancel a credit agreement instead.

If you have other debts, make sure you prioritise them properly — priority debts like rent or council tax should usually come first.

Check if Your Agreement Is Covered

First, confirm whether your credit agreement is protected by the Consumer Credit Act. This should be clearly stated near the top of the agreement.

The Act typically covers:

Personal loans
Credit cards
Payday loans
Hire purchase deals
Catalogue credit
Store cards
Store finance or ‘buy now, pay later’ plans

It doesn’t matter how the credit was arranged — in person, online, over the phone, or through the post.

If you’re not sure whether your agreement is covered, speak to an adviser at Citizens Advice.

How to Pay Off a Loan in Full

To settle your loan early, write to your lender and ask for the total amount needed to pay it off completely — this is known as an early settlement figure.

By law, the lender must give you this amount. The final figure will be based on how much interest you’ve already paid, and you won’t be charged the full amount of future interest.

Once you receive the figure, you’ll have 28 days from the date your request was received to make the full payment.

Important: You’re not obligated to proceed just because you asked for the settlement figure — you can continue making regular payments if you prefer.

If You Want to Pay Off Part of the Loan

Paying off only part of your loan early can still save you money, but not as much as paying it off in full.

To do this:

Let your lender know in writing that you plan to make a partial early repayment
Ask them to explain how the payment will affect your overall loan balance and future monthly payments
You might be given the option to reduce your monthly payments or shorten the loan term
Make the payment within 28 days

Need Help?

If your lender fails to respond to your request for an early settlement figure, or if you think they’ve calculated the amount incorrectly, contact Citizens Advice for free support and guidance.