Does my equipment's effectiveness degrade with the durability score?

In Star Wars: The Old Republic, all my gear has a durability score which ticks down towards zero until my stuff is broke and doesn't work. If my equipment is down to, say, 20% durability, is it less effective than equipment at 100% durability, or is it more like hit points where you're at full strength until you fall over dead?

Do repair costs scale linearly, or is there a penalty for deferred maintenance?

Nope.

Equipment is binary - it's either broken, and useless, or it's not, and gives 100% of its normal benefits.

Repair costs scale linearly, though there's a minimum of 1 cr.