SAMA bans full-term costs on early repayment

Logo of Saudi Central Bank (SAMA)

The Saudi Central Bank (SAMA) recently issued the Implementing Regulations of the Finance Companies Control Law, granting beneficiaries the right to accelerate repayment of the remaining financing amount at any time.

The regulations prohibit finance companies from charging the cost of the term for the remaining contract period. However, finance companies may receive compensation for reinvestment costs, not exceeding the cost of the term for the months following repayment, calculated on a declining balance.

They may also recover amounts paid to third parties under the financing contract, as stipulated in the agreement, if such expenses are non-recoverable, for the remaining period of the financing contract.

The regulations exempt real estate financing contracts, allowing them to include a clause prohibiting early repayment, provided the prohibition period does not exceed two years from the date the contract is concluded.