Paying off a loan early is a great way to save money on interest and get out of debt faster. However, it’s essential to understand the benefits, process, and considerations of early loan repayment before making extra payments. In this article, we will discuss the benefits of early loan repayment, the steps to take, and some things to consider before making extra payments.
Benefits of paying off loans early:
Early loan repayment can provide several benefits, including:
- Saving money on interest: By paying off your loan early, you’ll save money on interest, which can add up to thousands of naira over the life of the loan.
- Getting out of debt faster: Paying off a loan early can help you get out of debt faster and free up money for other financial goals.
- Improving your credit score: Paying off a loan early can improve your credit score, as it shows lenders that you’re a responsible borrower.
- Reducing stress: Being in debt can be stressful, and paying off a loan early can help you reduce that stress and feel more financially secure.
Steps to Early Loan Repayment:
If you are interested in paying off your loan early, follow these steps:
- Ensure your account is credited: Always keep your loan repayment account credited before the date of repayment to make it easier to deduct the agreed payment when it is due.
- Make extra payments: Consider making extra payments to accelerate your repayment process. Even small extra payments can make a big difference in the long run.
- Determine how much extra you can afford to pay each month: Before making extra payments, determine how much you can afford to pay each month. Do not put yourself in a financial bind by making extra payments that you cannot afford.
- Contact your lender: Reach out to us on 0700 5000 500 to find out how to make extra payments.
- Monitor your progress: Keep track of your progress and make adjustments as necessary. If you receive extra money, consider putting it towards your loan to pay it off even faster.
Should you consider making extra/early repayments?
Before you start making extra payments, here are some things to consider:
Early repayment can be bad: While paying your loans before their due date sounds like a good decision, it isn’t if you don’t do it right. Taking a loan today and repaying the day after can affect your credit score negatively.
Other debt: If you have other debt, it may be better to focus on paying the agreed amount for your repayment rather than extra. Don’t put pressure on yourself or your finances to pay more than you’re supposed to.
Early loan repayment can save you money on interest, help you get out of debt faster, improve your credit score, and reduce stress. However, it’s crucial to understand the benefits, process, and considerations of early loan repayment before making extra payments. By following the steps and considering the factors discussed in this article, you can make informed decisions and pay off your loan early in a smart and responsible way.