When it comes to paying back your personal loan, there are a few simple ways you may be able to pay it off sooner, which in turn can reduce the amount you repay overall.
If you have a personal loan with a variable interest rate you’re likely to have a little more flexibility when it comes to paying the debt down. But you can speed things up for a personal loan with a fixed interest rate too.
The amount of additional repayments you’re able to make on a personal loan will differ depending on your loan provider and the type of personal loan you’ve taken out. For a Fixed Rate Personal Loan and Secured Personal Loan with CommBank, for example, you can make additional repayments* subject to early repayment adjustment, while on a Variable Rate Personal Loan you can make unlimited extra repayments.
Budgeting for extra repayments or using any extra money you come into (like a pay rise or tax refund) may also help you knock over the balance faster.
If you have a personal loan with a variable interest rate, you may be able to alter your repayment amounts. If you’re working to a budget, see if you can create a little extra room each month to increase your repayments. The less you’re owing the less interest you’ll be charged, so every bit counts.
You may also be able to alter how often you make repayments for your personal loan. For example, by making fortnightly rather than monthly repayments you’ll pay your loan off sooner. That’s because there are 26 fortnights in a year, meaning you’ll end up pay off an extra two weeks over the course of a year without really noticing a big difference compared to paying monthly.
If you’ve got a bit of spare room in your budget, and your personal loan allows it, you can increase both your repayment amount and frequency – helping you make an even bigger impact on your loan.
Your personal loan may also give you the ability to redraw the additional repayments you’ve made should you need the funds. This gives you the best of both worlds – you can save on interest payments by making those additional repayments, but the funds will also still be available to draw on whenever you need it.
Things you should know
* Additional repayments made on fixed rate and secured personal loans are not available to be redrawn.
This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. You should consider seeking financial advice before making any decision based on this information. Applications for finance are subject to credit approval. Full terms and conditions will be included in our loan offer. Fees and charges are payable.
