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Is Early Loan Repayment Healthy For You?

Posted by: funnytodd   
February 28th,
2020

Life has its good and the bad and quite often you may face a predicament for which you require just a little money that is extra. That loan will come in handy at such times. Nonetheless it may sometimes take place that your particular finances turns around faster than anticipated and allows you to pay back a sizeable amount associated with the loan and clear the maximum amount of financial obligation as you possibly can.

Paying down your debt faster may help decrease the total interest costs, and also this in change means you may spend less time with debt. All is well so far. But with some facts before you walk into the bank flashing a wad of cash, familiarise yourself. It’s understandable why there’s a penalty for delayed payment, but do you realize that you can be penalised for early repayment as well?

What’s prepayment penalty?

While the name recommends, a prepayment penalty is really a financial burden you need to bear whenever you spend your loan off earlier in the day than specified within the contract. In the event that terms and conditions of the loan agreement contain a prepayment clause, you shall be penalised if you clear the debt early.

It this way – when you repay a loan early, the lender will not get the expected interest (for lenders, the interest is their profit) if you feel this sounds counterintuitive and are wondering why no one would want all their money at one go, think of. Thus this clause can be set up.

The quantity may differ and also the training is not universal. Read the rest of this entry »