Generally speaking, the earlier you make the early repayment, the more outstanding interest expenses are likely to be saved. However, the borrowers should take into consideration of the early settlement penalty involved when making the early repayment. As the calculations of early settlement penalty are different for different loan types, the loan terms and conditions should be read carefully before deciding whether to make the early repayment. In general, as the outstanding principal is larger in the earlier instalments of the loan, the interest proportion in the monthly instalment will be higher in the earlier instalments. In other words, the interest proportion will be smaller in monthly instalment in the later instalments. If the customers decide to make early repayment in the later instalments of the loan, the loss due to early settlement penalty may outweigh the gain due to interest expenses saving of the outstanding instalments. Borrowers are advised to check and compare the total amount involved in the early repayment and the amount of outstanding interest before deciding to make the early repayment. To illustrate the calculation of early settlement amount and determine whether interest expenses can be saved by making early repayment of personal instalment loan, please refer to the below corresponding examples according to the loan types of the loan accounts.
Applicable to general unsecured loan products
1. Early Settlement Calculation