Baku, September 23, 2025
Borrowers in Azerbaijan who try to pay off their loans ahead of schedule are still forced to cover full interest costs, a practice that experts say is out of step with international standards.
Financial governance specialist Asif Ibrahimov told Konkret.az that while banks justify the rule by pointing to their projected income from loans, the policy unfairly burdens citizens.
“Even if a client repays the debt early, banks demand full interest. It’s usually written into the loan agreement, but it’s not fair. The Central Bank should pay special attention, and lawmakers should raise this issue,” Ibrahimov said.
Global practices
In many countries, borrowers benefit from early repayment:
France – Only interest for the actual months is paid, with at most a 1–2% penalty.
United States – Borrowers repay the principal plus a prepayment penalty, typically 3–4%.
Russia, Georgia, Turkey – Interest is calculated only up to the repayment date; the rest is canceled.
Ibrahimov argued that Azerbaijan could easily adopt a similar system:
“At minimum, the U.S. model could work here: allow banks to charge a fixed penalty for early repayment, but not force clients to pay the full projected interest. Unfortunately, banks don’t want to give up forecast profits.”
