Can the bank charge a fee for repaying a loan early?
Normally it cannot — the opposite of what most people assume. You may repay credit early, in whole or in part, and you pay interest only up to the day of repayment. The lender generally may not demand compensation, an administrative charge, or any other fee. The one significant exception is repayment during a fixed interest-rate period. And even then there are caps: no more than 1% of the sum repaid early where more than a year remains, and no more than 0.5% where a year or less remains. And one further limit: compensation may never exceed the interest you would otherwise have paid to the end of the agreement.
📋 The rules
- You may repay early, in whole or in part
- Interest — only up to the repayment date
- Compensation may generally not be charged
- The exception: a fixed-rate period
- Caps: 1% or 0.5% of the sum repaid
🔓 Exceptions
- No compensation may be charged where the sum repaid early over 12 months does not exceed €9,960
- It is also excluded for credit insurance, overdrafts and non-fixed rate periods
- For mortgage credit, the lender must supply the information immediately and free of charge
⚠️ Penalties & fines
There is no penalty on the consumer for repaying early. But beware the word "commission": some lenders present the compensation as an ordinary fee. Since 18 April 2025 the regulation expressly clarifies this — the prohibited compensation includes costs, so the charge cannot be relabelled as an administrative or processing fee. And there is a right that is used far too rarely: on full early repayment you are entitled to a proportionate reduction in the total cost of the credit — which can include one-off origination charges, not merely future interest. If you did not receive it, the claim can generally be brought within three years of the repayment.
📎 Official sources
- likumi.lv · Cabinet Regulation No. 691 →
- PTAC · Early repayment →
- likumi.lv · Amendment to Regulation 691 →
❓ Frequently asked
Can the bank charge a fee?
Normally not. The lender may not demand compensation, an administrative charge or any other fee for early repayment, except where the repayment falls in a fixed interest-rate period.
How large can the compensation be?
No more than 1% of the sum repaid early where more than a year remains of the agreement, and no more than 0.5% where a year or less remains. It may not exceed those caps.
What is the €9,960 threshold?
No compensation may be demanded at all where the total repaid early within a 12-month period does not exceed €9,960. It is an exception many borrowers never hear about.
Can the fee be renamed as something else?
It cannot. Since 18 April 2025 the regulation expressly states that prohibited compensation includes costs — so it may not be presented as an administrative or processing charge instead.
Am I owed a cost reduction?
You are. On full early repayment you are entitled to a proportionate reduction in the total cost of the credit, which can include one-off origination charges as well as future interest.
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