Can a lender charge you for paying off a loan early?
Consumer Protection Act; Central Bank of Kenya · sources read 5 Oct 2026
You can pay off the whole balance of a loan at any time without any prepayment charge or penalty. On a fixed loan you can also pay part of it early, on a scheduled payment date or once a month, without penalty.
- Where
- Your lender first; for banks, then the Central Bank of Kenya; or the courts
Steps
- If you are charged a prepayment penalty, complain to the lender in writing with full details.
- If a bank's answer doesn't satisfy you, write to the Central Bank of Kenya with the details and the bank's reply.
- You can also take the matter to court under the Consumer Protection Act.
Watch out
- If you clear a fixed loan in full early, the lender must refund or credit part of the non-interest costs you paid (fees and charges), worked out in the prescribed way.
- Paying only part early does not earn you that refund.
- The rule does not apply where the borrower is the national or a county government or a public entity, or where the lender is a foreign development finance institution.
Who this covers
- Borrowers under a consumer credit agreement, where a lender lends money or extends credit to you.
Official sources (2)
- Consumer Protection Act (Cap. 501), version of 31 December 2022 new.kenyalaw.org · read 5 Oct 2026
- Resolution of customer complaints in the banking sector centralbank.go.ke · read 2 Oct 2026