Tips and Tricks on How to Pre-Close Personal Loan Early

Taking out a personal loan can provide financial assistance when needed, whether for consolidating debt, funding a major purchase, or managing unforeseen expenses. However, repaying the loan over an extended period may lead to higher interest payments. Closing your personal loan early can save you money on interest and provide financial freedom sooner.  

Today, we will explore effective tips and tricks on how you close your personal loan faster and why it is an option worth serious consideration.

Why Should You Close Your Personal Loan Early?

Closing a personal loan early can offer several advantages and benefits. Here are a few reasons why you may consider closing your personal loan ahead of schedule: 

  • Save on Interest Payments: One of the primary reasons to close a personal loan early is to save on interest expenses. By paying off your loan sooner, you reduce the total interest paid over the loan term. This can lead to significant savings, allowing you to allocate those funds towards other financial goals or investments. 
  • Improve Financial Freedom: Closing your personal loan early also provides a sense of financial freedom and peace of mind. Being debt-free allows you to allocate your income towards savings, investments, or other essential expenses. It also eliminates the monthly burden of loan repayment, giving you more flexibility and control over your finances. 
  • Enhance Credit Score: Closing your personal loan early can positively impact your credit score. A paid-off loan reflects responsible financial management and timely repayment. It demonstrates to lenders that you can effectively manage your debts and may improve your creditworthiness for future loan applications or credit-related activities. 
  • Increase Disposable Income: Monthly loan repayments consume a portion of your income. By closing your personal loan early, you free up that monthly payment amount. This additional disposable income can be used to cover other essential expenses, invest in savings or retirement accounts, or pursue personal goals and aspirations. 
  • Simplify Financial Life: Having one less debt obligation simplifies your financial life. Closing a personal loan early eliminates the need to manage monthly payments, interest calculations, and potential late fees. It streamlines your financial obligations, allowing you to focus on other financial priorities and goals.
  • Achieve Financial Goals Sooner: Closing your personal loan early brings you closer to achieving your financial goals. Whether it’s saving for a down payment on a home, starting a business, or pursuing higher education, eliminating debt frees up resources that can be directed towards your goals. It accelerates your journey towards financial independence and enables you to achieve your aspirations sooner. 

 

How to Close Your Personal Loan Early?

Step 1- Create a Budget and Payment Plan

  • Create a comprehensive budget that accounts for your income, expenses, and loan repayment. 
  • Evaluate your monthly cash flow and identify areas where you can cut back on non-essential spending. 
  • Allocate a specific amount each month towards your loan repayment.

Finnable provides flexible repayment options, allowing you to choose a higher monthly instalment if it aligns with your financial capabilities.

Stage 2- Make Frequent or Bi-Weekly Payments 

  • Make payments more frequently than the standard monthly instalment. 
  • Divide your monthly payment into smaller bi-weekly or weekly payments to pay off the principal amount faster and save on interest. 

 

Finnable facilitates multiple payment options, making it convenient to schedule frequent or automated payments through their user-friendly online platform. 

Stage 3- Allocate Windfalls and Extra Income 

  • Use unexpected windfalls or extra income, such as bonuses or tax refunds for loan repayment
  • Make a few lump-sum payments to significantly reduce your outstanding loan balance. 

 

Finnable allows you to foreclose your loans so that you can enjoy financial freedom at an earlier date.

Stage 4- Refinance at a Lower Interest Rate 

  • Explore refinancing options to secure a lower interest rate and reduce EMI amount
  •  Assess associated fees and determine if the overall savings justify the refinancing process

Stage 5- Avoid Late Payments and Penalties 

  • Learn about any additional fees or penalties associated with the loan
  • Ensure timely payment of your monthly instalments to maintain a positive repayment history
  • Set reminders and notifications to help you stay on top of your payment schedule

Stage 6- Consider Debt Consolidation 

  • Consolidate your loans into a single personal loan 
  • Focus on paying off a single loan
  • Allocate more funds toward early loan closure.

Conclusion

Clearing your personal loan early not only saves you money on interest but also provides financial freedom and peace of mind. Finnable, as a trusted loan provider, supports your early loan repayment goals with their flexible repayment options, convenient online platform, and reliable customer service. By following the tips and tricks outlined above, and leveraging the services offered by Finnable, you can accelerate your personal loan payoff and achieve financial independence sooner than expected. Take control of your financial future and close your personal loan early with Finnable’s assistance.

Amit Arora Finnable

AMIT ARORA

I am a seasoned retail banker with over 21 years of global experience across business, risk and digital. In my last assignment as Global Head Digital Capabilities, I drove the largest change initiative in the bank to deliver the end-to-end digital program with over US$1 billion in planned investment. Prior to that, as COO for Group Retail Products & Digital, I implemented a risk management framework for retail banking across the group.
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