Contracts
What Is an Early Termination Fee?
By FixMyContractLast updated Sep 25, 20262 min read
An early termination fee is what a contract charges you for ending it before the agreed date — common in leases, phone and internet plans, gyms and service contracts.
How it is usually calculated
A fixed amount, a number of months' payments, or the remaining payments on the term. The formula is in the contract.
What to check
Whether the fee drops over time, whether it applies if the other side breaks the contract first, and whether any other charges come on top.
Related terms
Liquidated damages and termination for convenience.
How the formula reads in practice
- “Two months' rent” — a fixed amount, whenever you leave.
- “The remaining monthly payments until the end of the term” — the fee shrinks each month.
- “$200, reduced by $10 for each full month of service” — a declining fee, common in phone and internet plans.
The wording decides which one you have, so find the exact sentence.
Questions to ask before you sign
- What would I owe if I left in month 2, and in month 11?
- Is there a window to cancel without a fee?
- Does the fee apply if I move somewhere the service isn't available?
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This is information, not legal advice.