In this blog post, we offer some information about making extra payments on a debt you owe.
If you decide to make extra payments on debts you owe, know that the law in British Columbia gives you the right to do so. The consumer law that we are responsible for, the Business Practices and Consumer Protection Act, has a section that speaks to the “Prepayment of credit” – you can read that section here.
Except for a mortgage, you can always pay off, or make extra payments, on a debt you owe penalty-free. The amount you pay is entirely up to you: it can be all the debt, or just a portion of it. When you make additional payments, the creditor cannot charge you fees to process the payment or issue you a penalty for paying early.
Also, if you prepaid for an optional service on the debt (such as life insurance), you are entitled to a refund of the amount that is no longer required because of the additional payment.
Making extra payments on a debt not only result in the debt being paid off sooner, but it also saves you interest costs.
We hope this information was helpful!