7. Repayment

7. Repayment

The timing for repayment of the loan(s) will be set out in the loan agreement. A borrower may be asked to repay all the loan(s) at the end of the loan tenor (known as bullet repayment) or by way of instalments.

Prepayment

In some cases, the borrower may have an option to prepay the loan, i.e. to repay the loan earlier than the repayment timing set out in the loan agreement. Sometimes, the lender may charge a prepayment fee. If a loan is prepaid before the end of the applicable interest period, the borrower may be required to pay to the lender break costs, which is a fee that represents the lender’s loss if the borrower repays the loan early.

Repayment on demand

In the case of an uncommitted loan, the lender would have an overriding right of repayment on demand. The lender may exercise this right to request immediate repayment of all or part of the outstanding amount of the loan, interest and all other sums owed by the borrower and/or terminate the loan agreement. Where the borrower is unable to meet the demand, the lender would be entitled to enforce any security that has been granted for that loan. Such a right would permit the lender to recover against the borrower in circumstances such as where it appears that the borrower’s ability to repay the loan is questionable.

Failure to repay the loan in the manner set out in the repayment clause would constitute an event of default which entitles the lender to accelerate the loan. Please refer to the discussion on default for more details.