Study the Conditions of Early Repayment of Short Term Loans

Created: 2017-07-12 00:00:00

Study the Conditions of Early Repayment of Short Term Loans

Many borrowers have the intent to repay short term loans before the end of the terms. Not many people like to remain indebted. The sooner one can repay a loan, the better it is. However, early repayment is not deemed desirable by the lending industry. One would think that a lender would rejoice when a borrower repays the loan amount with interest before the end of the term but their calculations are based on repaying the entire interest and not less.

Most traditional lenders will have a penalty or an early repayment fee, be it short term loans or relatively long term loans. You can put short term loans anywhere from a few months to a year and half or even three years in some cases. The penalty could be a month's interest, in some cases the interest of two months and in a few cases it could be the interest along with an early repayment fee. You must find out what this fee is and how many months worth of interest you would be charged. In some cases you can get some relief while repaying early. The remaining interest may be waived off and you could get some rebate when the whole pending amount is calculated. However, this is not the standard.

When you apply for short term loans and if you have any intent to repay early, you should ask the lender specifically and be aware of the scheme of things. It is fine to not repay early but it is better to stay informed. You can continue repaying the loan as it pans out instead of paying a penalty. If you are in need of another loan or for some reason you have to repay early then you should try and work out a deal with the lender.

Warning: Late repayments can cause you serious money problems. For help, go to moneyadviceservice.org.uk