At the start of your loan, we will work out the amount of interest we can charge. Regulations set out the formula we need to use to work this out.
Repaying your loan in full early
The interest formula allows us to charge daily interest from the date we gave you the loan up until 28 days after we receive your notice that you want to repay all of the loan early. It also allows us to charge an additional month of interest if your loan agreement said that your loan was repayable over a period of more than 12 months.
Usually, the amount of interest we can charge will be reduced as a result. In these cases, we’ll refund you the difference between the interest included in the total amount payable and this reduced amount of interest. We will refer to this refund as a ‘rebate’ in our communications with you.
Impacts of a past delayed repayment
Sometimes we might not reduce the amount of interest we can charge. This could happen where your loan lasts longer than we state in your loan agreement. For example, where you have selected a repayment date that is later than one month after we give you the loan, and as a result your first repayment is delayed, or you have been late making your monthly payments.
If this happens, your monthly repayments towards the start of the loan will pay off more of the interest amount compared to if your loan lasted as long as we state in your loan agreement. But we’ll never actually charge you more interest than is included in the total amount payable. So once you’ve paid the amount of interest included in the total amount payable, your remaining monthly repayments will just pay off the loan amount.
This is why we might not reduce the amount of interest we can charge. Because even though you’re repaying your loan early, the full amount of interest will have already been paid or become payable.