October 1, 2019

Early loan repayment – pros and cons of such a solution


Each payday loan taken at a non-bank company can be repaid earlier than required by the contract. Is this solution beneficial for the client? Or maybe it is better to wait with the return of the debt until the end of the contract? Today we are checking the pros and cons of early loan repayment.

Each loan agreement is concluded for a certain period. Therefore, the customer will find the date that the loan will be repayable in this document. However, this does not mean that the debt must be paid off exactly on that day. The customer has the right to pay the payday payday at any time during the contract, without incurring any additional costs. This solution brings many benefits. Let’s start with them.

Advantages of early repayment of the loan

Advantages of early repayment of the loan

Early repayment of the loan means lower fees for borrowing money – each loan agreement specifies how much the customer must pay for using the borrowed money in a given period. However, if it returns the loan earlier, its use time is shorter than assumed in the contract. This means that borrowing costs should also be reduced. Lenders comply with this rule and if the customer pays for the loan “in advance”, they reimburse him for the unused period of using payday loans. If, on the other hand, the payment was to be made at the end of the contract, on the day of the payday refund, the lender recalculates the cost of the loan and the customer pays only for the period in which he actually used the money. Ultimately, payday loans come out cheaper than we expected.

No costs of delay being due – waiting for the debt to be repaid until the last day of the contract, the customer may not be able to pay the loan on time. What counts here is the date the money is credited to the lender’s account. As a result of various coincidences (including disruptions in the operation of banks), our transfer may be delayed. However, each day of delay generates additional costs, which unnecessarily increase loan fees. To avoid this type of situation, it is good to pay the debt a few days before the deadline.

Building the image of a reliable customer – each loan repaid on time contributes to building the creditworthiness of a specific person. What’s more, if the lender sees that the client is honest about his obligations and his conscience settles his debts ahead of time, he is more willing to give him further financial support. It is worth taking care of your financial image to avoid getting trouble in the future

Disadvantages of early repayment of the loan

Disadvantages of early repayment of the loan

Limited use of money – by returning a loan ahead of schedule, the client closes his path to using the borrowed cash again. After settling the debt ahead of time may appear other unexpected expenses, for which there will be no financial resources. And another loan is more formalities, and often higher costs.


There are many reasons for early repayment. Of course, it is not about force seeking financial means to return the debt ahead of schedule. This solution works only if we get an unexpected injection of cash and we can pay our liabilities without incurring losses in other areas of life.

When signing a loan agreement, it is worth choosing a longer repayment period if possible. It is better to easily pay back the loan ahead of schedule than to incur unnecessary costs resulting from the delay.