Personal loan lump sum repayment - Aussie Stock Forums

Results 1 to 3 of 3
  1. #1

    Default Personal loan lump sum repayment

    I have a personal loan with about $10k left to be repaid and had set a little time aside this evening to stick a few numbers in a spreadsheet and weigh up different lump sum repayment scenarios. However, I'm missing an important piece of info - if I pay a lump sum, which of the following is changed: the specified length of the loan, or the specified amount of each repayment?

    The credit union was closed when I called at 4:30 to ask, the loan documents don't have anything to say on the matter, I can't find anything on their website and Google has been no help. So I'm just wondering if anyone here familiar with this stuff can confirm it's done one way 99% of the time, so I can dive into my spreadsheet tonight, or if it's an "it depends" thing and I'll have to wait.

  2. #2

    Default Re: Personal loan lump sum repayment

    Normally with any loan, repayments are calculated based on the length of the loan at the interest rate at the time of taking out the loan (assuming variable). For personal loans, the length is generally 5 years / 60 months. For home loans, the length is generally 25-30 years. If the interest rate changes, the repayments are re-calculated by the Bank for the remaining time left on the loan.

    Check that there is no penalty for making "lump sum repayments". Some banks / financial institutions used to do this... not sure if it's still common practise.

    The repayments should remain the same, since neither the interest rate nor the term of the loan have changed. You will however, be paying off the loan sooner... so also check for an "early-repayment fee".

  3. #3

    Default Re: Personal loan lump sum repayment

    Thanks - I confirmed there are no fees for lump sum repayments or paying it off early (seems to also be the case with other credit unions when I was checking their sites).

    So if one paid a lump sum into a personal loan which had a schedule of 30 monthly repayments of $400 remaining, what would normally happen is the repayment amount of $400 remains fixed and it's the number of repayments that is reduced (the expiry date of the loan is effectively brought forward). Does the option exist to retain the length of the loan but reduce the repayment amount (i.e. 30 monthly repayments of less than $400)?

Similar Threads

  1. Lump Sum vs. Dollar Cost Averaging
    By brilliantmichael in forum Trading Strategies/Systems
    Replies: 11
    Last Post: 7th-September-2015, 12:12 AM
  2. Personal loan for investment?
    By foxxo in forum General Investment and Economics
    Replies: 10
    Last Post: 20th-September-2010, 07:58 PM
  3. Is trading a zero sum game?
    By joe8489 in forum Beginner's Lounge
    Replies: 31
    Last Post: 1st-March-2009, 07:54 AM
  4. Car/Personal loan question
    By y0ud in forum General Chat
    Replies: 1
    Last Post: 6th-October-2008, 11:42 PM
  5. Trading professionally: evolution or lump sum?
    By RobinHood in forum Trading Strategies/Systems
    Replies: 0
    Last Post: 27th-April-2008, 08:31 PM


Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
Aussie Stock Forums