A reader from London wants to take a personal loan, but also have the flexibility to pay it off early.

Jo Crosse, Halifax and Bank of Scotland personal loans expert, tackles the problem.

Matt from London asks:

Are there usually penalties for repaying a loan early?

I’m looking to take a loan, but don’t want to be stuck with it if I could pay it off early.

Let’s just say my finances can be a bit complex at times, but I have a steady job.

Jo replies:

In most cases, if you want to pay off your loan early you will end up paying a lot less than your outstanding balance – the Consumer Credit Act states that if customers exercise their right to repay the loan early they are entitled to a rebate of interest.

However, to cover the costs of setting up the loan (if there was no fee), most lenders are entitled to charge up to 58 days interest (on the outstanding loan balance).

If you can find a loan with no early settlement fees and a good APR (they do exist!) this would be best for you.

If you have a question for Jo, go to the myfinances.co.uk Ask the Loans Expert section.

Or for more information on your loans options go to personal loans at Halifax.