Nationwide Building Society has removed the early settlement charge on personal loans, for both new and existing customers, in a bid to make borrowing fairer.
It said this will benefit around 70 percent of its personal loan holders who pay their loan off early by either paying the loan or refinancing.
The society said this could save customers an average of £70 based on the loan size, interest rate and when they choose to settle.
The charge is currently prescribed by the Consumer Credit Act and allows for up to 58 days’ interest to be charged when a customer requests a settlement quotation.
As part of its approach to create borrowing fairer, Nationwide offers soft quotes on personal loans and credit cards at application stage so customers know the rate they will be charged prior to a full quote, which impacts credit scores.
Last year the society also removed the over-limit fee on credit cards so customers aren’t penalised for “making a mistake”.
Carl Burke, Nationwide’s head of personal loans, said: “As a mutual we’re always looking at how we can reinvest value back to our membership and this latest change is another example of this.
“The significant majority of our customers repay their personal loan early and we think it’s right that we don’t penalise these customers for doing so.”
Nationwide Building Society will appear on a panel on the treatment of vulnerable customers at the Credit Summit, in London, on March 30.