The decision to repay a personal loan before the expiration of the contract, to improve the payment conditions, will depend on your solvency condition. If the additional capital is actually available and the commitment made with the financial entity can be answered in advance, it is advisable to do so.
The early partial repayment of a loan is one of the alternatives to try to save money , for interest. But, do you know what are the conditions to access this path? Through which route do you get the greatest savings or benefits? Expert advises you, recommending economic loans, with the lowest interest, according to your particular case.
What is the real savings through early partial repayment of a loan?
The banks take into account the variations that could occur in the payment conditions, establishing in the loan contracts the commissions that support them. In these cases it is important:
- Know the commission for early partial repayment of a personal loan, which is limited by the Law. These are between 0.5% to 1.0% of the capital to be amortized, depending on the term to cover the debt.
- If you proceed to repay a personal loan, partially, take stock of the amount to be repaid, against the interest you will stop paying. The greater the amount, the greater the savings.
- Consider the type of repayment system of the current loan. If the quotas are constant, progressive or decreasing, a real difference is made at the moment you decide to amortize. This balance will allow you to establish if there is a real substantial saving and worth the effort, in accelerating the payment of the debt.
The set of terms “vs” loan installments
In the interest to improve payment conditions we can fall into the game of financial institutions and extend the deadlines, to seek to reduce payment fees. In the longer term, the amount of money, in interest, that you must pay is greater. It is the only rule to consider.
The convenient move is precisely to reduce the deadlines, increasing the payment of fees and covering the loan payment in less time. This option favors you if you really are in a position to face change with comfort, while still fulfilling all of your personal and family commitments.
Amortize capital, to reduce fees, seems to be the winning formula because it allows real money savings. In any of the cases you encounter, your financial analyst will make your way easier, presenting tangible options to facilitate decision making.
What to do if you are on the delinquency list?
If you are on the delinquency list you should analyze the options that allow you to continue saving and paying debts, without impacting the rest of your activities. Many financial institutions, under certain conditions, keep their doors open to financing even for people on delinquent lists such as delinquency.
In most cases the amount to be financed, although small, does not need greater guarantees. Otherwise, the endorsement of a property, or with a vehicle endorsement, may be required to make them effective.