Posted in: Personal Loans

Should I Repay my Personal Loans Early?

We often hear about repaying loans early and the benefits of doing that. This is something that can have advantages and disadvantages though. So, whether you have a personal loan or any other loan it is worth thinking through them all before you make a decision. There are some listed below to start you off.


  • If you repay a loan early, it is usually the case that you will not have to pay so much money in interest on it. This means that by repaying early you will save some money. This can make a big difference if the interest on the loan is really high, but even if it is not that high it can still save you some money and that will be helpful. It can always be good to pay less if you can and so if you have this capability, to be able to repay the loan early, then you will pay less in total for the loan, in interest, compared with repaying it as required.
  • If you find having a loan stressful then repaying it early means that you will be able to get rid of that stress. Some people do not get that bothered by owing money, but there are some that worry about it and so by paying off they will be free of that stress. This can be a great thing because stress can have a big impact on our lives as well as our physical health.
  • If you repay a loan early it could improve your credit score. It might look better to a future lender if you have repaid early as it will demonstrate that you have the capability of managing your money really well.


  • You will need to find the money to repay early. This could mean that you will be cutting back elsewhere. You will need to be careful to make sure that it does not leave you short of money for things that you really need. You do not want to risk having to take out another loan because you have paid off the other one and then find that you need money for something that you had forgotten about. Therefore, you need to plan really carefully to make sure that you can afford to repay it.
  • Some loans have an early redemption fee. This means that they will charge you a fee if you repay it early. Some lenders only have very small ones and other have large ones. You will need to check whether the loan you are considering repaying has one and how much it is. Then you will need to calculate whether it will be cheaper to repay the loan early or whether it will actually be dearer. To do this you will need to calculate how much you will avoid paying in interest if you repay the loan early. Then look at how much te fee is and see if it is more or less than you will save.

Whether repaying the loan is the right thing to do will depend on you and the circumstances you are in. Obviously, you will need to have the money available to repay it but you will need to make sure that if you do spend it that you will not be short of money elsewhere. You will also need to think about whether you will end up paying more due to fees that you pay for repaying it early. You will therefore need to do a bit of investigating before you rush in and pay it back. Normally it will be worth it, but you need to be completely sure before you repay so that you do not make any mistakes.

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