Personal payday loans from banks or private lenders, like any other loan, are a financial burden. If you want to end the monthly interest and principal payments before the end of the term, you can replace your personal payday loan. This is especially worthwhile if you have unexpectedly received a larger sum of money (eg through an inheritance, a lottery prize or a salary increase). More here. But beware: The replacement of loans is not always recommended. Whether it pays to repay the loan early, depends heavily on the design of the contract.
Costs for the replacement of personal payday loans
When concluding the loan agreement, the payment of a prepayment penalty is often agreed. This is a fee due to the early, unscheduled repayment of the loan. If a borrower repays the loan earlier than agreed, he will violate the loan agreement. The bank thus incurs a loss because it does not receive the interest for the originally agreed period. To compensate for this financial disadvantage, many banks and private lenders demand a prepayment penalty. If you want to redeem your (private) loan early, you should therefore check whether the contract has agreed to pay such a fee. If so, it makes sense to compare these costs with the interest savings through early loan repayment. If a complete repayment of the loan for financial reasons is out of the question, it is worth considering a rescheduling. In this case too, the future interest savings should be compared with the possible costs of replacing the loan. More information about debt restructuring costs can be found here.
Alternative to the replacement of personal payday loans
Borrowers who have to pay a high prepayment penalty if the loan is repaid early should rather refrain from doing so. But that does not mean that the personal payday loan must last until the end of the agreed term. Many loan agreements give the borrower the right to make special repayments. For example, anyone who is allowed to repay 2,000 euros each year should make use of it. The special repayments reduce the term of the loan without incurring additional costs. You can read more about repayments here.
Replace personal payday loan and find new loan
Whether rescheduling or new financing requirements – who wants to replace his personal payday loan, which simply performs an online comparison with Town Lending. Thanks to the diverse loan offers, it is possible to find a cheap and advantageous loan within a short time.