Early Termination Charges
Early termination charges are imposed when you default, transfer, or pay off your loan before the end of the term. They are supposed to cover the costs of closing the account, as well as the economic losses incurred by your lender. This includes the interest payments, maintenance fees, and other ongoing fees you would have paid if you had finished the term. Early termination charges are sometimes listed as penalties. Australian law requires lenders to specify early termination charges in the contract, including the rates and amounts, to avoid misleading borrowers.