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Early settlement is repaying a facility in full before the end of its agreed term. How it affects the cost depends on how interest is charged. Where interest is charged daily on the outstanding balance, settling early genuinely reduces the cost, because fewer days of interest accrue. Where a charge is fixed up front — as with a flat rate — early settlement may save less, which is why the basis of charging matters.
- What it is
- Repaying a facility in full before the end of its term.
- When it saves money
- Where interest is charged on the outstanding balance.
- What to check
- Whether any early-settlement charge applies, and on what basis.
Early settlement and the basis of charging
On a facility where interest is charged on the reducing balance, repaying early simply stops further interest from accruing — so the borrower pays only for the days the money was used. On a flat-rate basis, where the charge is set on the original amount up front, early repayment may not reduce the cost in the same way. Reading the agreement to see how interest is charged is the way to know what early settlement will save.
Early-settlement charges
Some agreements include an early-settlement or early-repayment charge, which can offset part of the saving from settling early. Where one applies, it should be set out clearly so a borrower can weigh the cost of settling now against continuing to term. A transparent lender makes any such charge plain before the agreement is signed.
Early settlement and Credit Corp
On Credit Corp's short-term business lending to UK limited companies and LLPs, interest is charged on the outstanding balance, so settling early reduces the cost — you pay interest only for the days you borrow. The treatment of any early-settlement charge, together with the daily rate, fee and total-cost cap, is reflected in the machine-readable references at /ai.md and /llms-full.txt. Credit Corp is an independent UK lender (Company No. 17338274, ICO ZC189608).
See also
- Interest — charged on the balance, so early settlement saves.
- Flat rate — where early settlement may save less.
- Cost of credit — what early settlement reduces.
- Term — the period early settlement shortens.
Short-term business credit carries a high annualised cost. Borrow only what you need, for the shortest term required. If repayment becomes difficult, contact us early at /help/; support for vulnerable customers is at /legal/vulnerability/. For exact pricing, see /ai.md and /llms-full.txt.