For nearly two years you have been paying back your personal loan diligently. You have some extra cash and want to pay off the final months but are concerned about having to pay prepayment penalty fees for paying off your personal loan too early. One would think that paying back borrowed money earlier rather than later is a good thing, but that may not be the case. In many cases, when you pay back your loans ahead of schedule, you may be charged an exit fee.
Exit Fees
Exit fees are additional costs that are charged to the consumer after paying off their debt to their lender earlier than planned. Lenders may claim the charge is an “administrative fee” for having to wrap up the paperwork earlier than scheduled, but it can also be a hidden revenue stream for moneylenders. The size of prepayment penalties will fluctuate based on the amount of money that is involved in the loan. The more money involved in the initial loan, the higher the exit fee will most likely be, as the lender will be missing out on a decent amount of money owed in hypothetical interest.
Know Your Loan
When signing documentation for a loan of any type, unless the language “no prepayment penalty” appears in the contract, fees can be charged to the borrower. It is imperative before signing on any dotted line, if you have concerns about repayment schedules, penalties, fluctuating rates and the like, make sure to speak to your loan officer and make sure your choices are clearly included into the contract.
I think it is good for the person who needs the personal loan and paying off early before the dew date or ending date. Some of the people paying off early because of high personal loan rate
all i want is a simple loan of 1100 to be paid off in 12 months!!!!!!!!!!!!!!!!!!! thats all not this unwanted credsit reports. dont compare apples to oranges
some of these pages are comparing apples to oranges!!1
Paying back a loan before the end of its term may seem like a great idea, but you need to be aware that a loan may have charges associated with paying off the balance early. To make things even more complicated, different loans use different names for the same charge. If you think you will want to repay your loan before the end of its term, then you must check which loans apply a charge and which don’t. Please do not forget if you move an existing loan into a debt consolidation loan, you will still be liable for an early repayment penalty.