Can I repay my long-term loan early?
Some of the long-term loan lenders we feature allow you to repay your loan early. Since your loan is charged on a daily interest rate, it may be significantly cheaper to repay your loan sooner. In depends on the terms and conditions of the lender but some may put a penalty in place for early repayment whilst other companies will allow you to repay early at no extra charge.
There is usually a “My Account” section on the lender’s website where you login and repay your loan. Otherwise, you can call or email the lender directly to give permission to clear the balance. Repayment is usually collected via direct debit but lenders will also accept cheques. Credit cards are not usually used to make repayments because lenders do not want customers to repay credit using other forms of credit.
It’s smarter to repay early
If you can repay your loan early, it is a smart choice to do so to limit the cost of the loan and to be in debt for a shorter period of time. Simply because the loan states that it is 12 months loan does not mean that you have to keep the loan for the entire 12 months. If you required a loan for an emergency purpose and have used the money to sort the problem and can now repay the loan, you should clear your debts as soon as you can. This is why a long-term loan lasting 6, 12 or 36 months is more flexible than a payday loan because it allows you to keep your money for longer and repay at any point.
Can I reapply after?
Once your have repaid the loan early, you may be able to take out another loan with the lender for a higher amount and at a better rate. A lot of lenders have a trust rating system so as soon as you have repaid a loan early or on time, they feel more confident lending to you in the future.
Repaying early helps your credit score
Repaying your loan on time or before the due date may positively impact your credit rating. The more loans you repay on time will reflect positively on your credit score whereas missing repayment on things like loans and credit cards will negatively impact your credit score. The information on whether you have repaid a loan on time is passed onto a credit reference bureau and this information is available to anyone who runs a credit check on your account. So repaying your loan early or on time will not only help your credit score but also make it easier to obtain future finance from other lenders.