Is it better to retire a loan before it term or after the term?

Answer 1

Depends. You need to consider two things, - interest that is on your loan and the prevailing interest at this point of time. If the interest on your loan is lower than the present interest prevailing in the market then, it is better to continue because your money will not get better return by returning the laon. Instead the amount that you wish to return, can ve invested elsewhere to get you some return.
On the other hand if the interest on your loan is more than the market rate than you may consider returning the loan. Here too you need to consider two things. One if you return prematurely, you may have to pay penalty for doing so. Therefore does it justify it? And second is for how long have you been with the loan, if it is already paid about 70% then, you may consider to continue. The reason is that most of the lenders will have already taken the interest on all you amount by this time. What you are returning at this point of time is mostly principal amount.

Answer 2

Actually it's better the retire it before the terms, since it's a liability, but now a days all the Banks Charge penalty even you retire the loan before it terms, so it's advisable to do it on the Time.

Answer 3

It depends on the current int. rate scenario and the int. rate forecast.

In an adverse situation,
let us say, loan is contracted at 10% fixed,
and if interest rate scenario is on the fall, in such a way that the loan will be available at a rate cheaper than what ever you are going to pay as penalty for foreclosure right now, then better retire the loan before the maturity.

On the other hand, if the int. rates are on the rise, and if there is no clause that the rates will be revised, then thank your luck and continue with the loan.

thanks for halting your on-line raid at last.

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Answer 4

It is better to retire a loan before it term bcoz u feel urself free from ur comitment at the earliest. you can move for some other comitments and decisions.

Answer 5

Before, usually there are penalties attached to not paying the loan on time.

Please take the time to read and understand the terms of the loan.

Answer 6

Depends upon the rate of interest on your loan and the prevailing rates of lending and deposits. Also consider penalty for delay and incentive for early return, if any. You have to look at the opportunity cost.

Answer 7

If your resources permit, do it in spite of the penalty clause [if there is one]. It gives mental peace. Before that calculate the saving you make by decision.