Many entrepreneurs consider رواد الأعمال repaying a loan early after their new business becomes successful. When a borrower’s financial circumstances change, they may be able to

be able to pay off their outstanding installments ahead of schedule to avoid paying the cost of financing for the remaining term.

Borrowers may want to get out from under the burden of Loans, by paying it off early, in accordance with the financing regulations and rules established within a clear framework,

with the cost borne by the customer taken into account.

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Early Repayment Cases

The customer may repay the remaining financing amount early at any time before the end of the repayment period, except during the early repayment restriction period for real estate financing—if the contract includes such a restriction—

noting that the Saudi Arabian Monetary Authority has previously set a number of conditions for calculating the early repayment amount for loans.

The customer should carefully consider the timing and circumstances of deciding to repay earlier than scheduled, to ensure that doing so will be beneficial, while

Saving money, noting that financing installments can be paid off before the end of the repayment period in the following circumstances:

• The customer receives additional income—such as a salary increase, allowances, or financial bonuses—sufficient to cover the financing installments due.

• The customer has savings invested in a way that may generate returns lower than the cost of financing.

• The customer plans to consolidate all financial obligations, including loan installments and debts, into a single financing arrangement, such as obtaining a

debt buyout financing product.

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Early repayment amount calculation terms

The lender that the entrepreneur or customer works with may be entitled to compensation if they wish to repay the loan early, subject to

the limits and rules established by the Saudi Arabian Monetary Authority to protect the rights of both parties, as follows:

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1. The reinvestment cost must not exceed the cost for the three months following repayment.

2. The reducing-balance method must be used to allocate the term cost over the financing repayment period.

3. The term cost may be allocated proportionally across the installments, based on the outstanding financing balance at the beginning of the period for which each installment is due.

4. The lender may be compensated for an amount it pays to a third party under the financing contract that cannot be recovered, provided the amount is calculated based on the remaining term.

under the contract, noting that these may have been paid in advance and not reimbursed to the financing provider by the beneficiary, with supporting documentation included in the financing file.

5. The repayment schedule must clearly state several important details, including the number of payments, each payment date and amount, and the amount of the term cost (“profit”),

as well as the principal amount included in each payment and the remaining financing balance after each payment.

6. The entire remaining financing balance must be repaid.