Early settlement of a loan in Pakistan
Updated
Can the bank charge for early settlement in Pakistan?
You always have the right to repay early, and SBP says any penalty may not exceed the bank's actual loss or cost — it sets no fixed percentage, so the figure is in your Key Fact Statement. With PKR 600,000 outstanding, 30 months left at an example 20% and a 2% penalty (our example), you settle with PKR 612,000 and no longer pay PKR 155,333 of mark-up after the penalty.
Official rule: You always have the right to repay early. Any early-repayment penalty may not exceed the bank's actual loss/cost — SBP sets no fixed percentage, so use the figure in your Key Fact Statement. (source, checked 2026-10-21)
- Penalty
- PKR 12,000
- Mark-up you no longer pay, after the penalty
- PKR 155,333
SBP's limits come from its Prudential Regulations for Consumer Financing (as amended by BPRD Circular Letters 26 of 2020, 29 of 2021 and 19 of 2022), the Prudential Regulations for Housing Finance 2026 and the Business Conduct and Fair Treatment of Consumers framework (BC&FRF, 2025). Your bank's Key Fact Statement and its own credit review are what count.
Installments on this page follow the standard monthly formula on the reducing balance. Your bank counts mark-up or profit day by day between the actual payment dates and rounds each amount, so its own schedule can differ slightly. Only your signed offer and Key Fact Statement are binding.
Not a valid document. Estimate for information only — not financial advice, not an offer of credit and not a bank document. Errors are possible. Only your bank's or finance company's official offer letter, contract and statements are binding.
SBP's rules on early settlement
- Your right: You always have the right to repay early. Any early-repayment penalty may not exceed the bank's actual loss/cost — SBP sets no fixed percentage, so use the figure in your Key Fact Statement.
- Revised schedule: After a prepayment or a benchmark-rate change the bank sends a revised repayment schedule within 15 days.
- Before you sign: Before you sign, the bank must give you a Key Fact Statement (KFS) for the product: APR, monthly installment, total amount payable, other charges, early-payment terms and the SBP complaint link.
Islamic financing follows the same SBP rule. Any lock-in period must be in the terms with "a calculation of charges/penalties" (SBP, BC&FRF).
Where to complain
- Your bank first, in writing. It must acknowledge the complaint and resolve it within SBP's time limits (card disputes within 45 working days at most).
- SBP's complaint portal Sunwai — sunwai.sbp.org.pk — also for Roshan Digital Accounts. Your Key Fact Statement carries the link.
- Banking Mohtasib Pakistan (the banking ombudsman) if the bank has not resolved your written complaint within 30 days — how to file.
Questions people ask
Is there a maximum early settlement fee in Pakistan?
SBP sets no fixed percentage. The penalty may not exceed the bank's actual loss or cost, and any lock-in period and its charges must be in the terms and the Key Fact Statement.
Can I pay off part of my loan?
Yes — in Pakistan, after a prepayment the bank must send a revised repayment schedule; ask whether it shortens the tenor or lowers the installment.
Where can I complain if the bank refuses?
First to the bank in writing, then SBP's Sunwai portal, then the Banking Mohtasib if the bank has not resolved it within 30 days.