If I take out a personal loan, when do I have to start paying it back?
It often depends on the specific loan offer. However, in most cases, you will be charged interest from day one of your loan. So, start paying back the loan as from the very first month if you don’t want to pay even more in interest.
Here are some important things to keep in mind when picking the personal loan for you:
- Redemption penalties are normally hidden away in the small print and relate to charges levied if you decide to repay your loan early. Legally, lenders can charge you one months’ interest in lieu of repaying your personal loan early.
- When choosing your personal loan, make sure that the rate you will pay is a fixed rate and not variable. With a fixed rate of interest, you will repay the loan back in equal instalments and at the same interest rate over the term of the lending. With a variable rate of interest, this means that the interest rate can vary.
You would have to repay the loan, plus interest, based on whatever terms are in the contract you will have signed.
You do want a FIXED rate type of loan. So many people are having financial difficulties right now because of variable loans they borrowed.
So as soon as I take out the loan, do I have to start paying it back right away? Or would that be wise?
The faster you pay it back, the less interest you will pay!