The reasons why early repayment of provident fund loans is not recommended are as follows.

1. Liquidated damages need to be paid.

Within the repayment period of 1-2 years, 2% of the repayment principal (minimum 20,000) will be charged as liquidated damages.

Within the repayment period of 2-3 years, 1% of the repayment principal (minimum 10,000) will be charged as liquidated damages.

Therefore, the earlier the prepayment is, the higher the prepayment amount will be, and the more liquidated damages will be paid.

2. Provident fund loans have low interest rates.

The interest rate of provident fund loans is low, so the cost of borrowing for users is not high.

When users have sufficient liquidity in their hands, they can use the money for investment and financial management. As long as the investment return rate is higher than the provident fund loan interest rate, the user will not lose money.

3. Liquidity in hand will decrease.

After the provident fund is repaid in advance, the liquidity in the user's hands will be reduced.

When money is needed urgently, insufficient liquidity will make it impossible to cope with these risks.

4. Refinancing interest increases.

If the user repays the provident fund loan in advance and then applies for other loans, the interest rate of other loans must be higher than that of the provident fund loan, so the loan interest will increase.

5. Increase users’ repayment pressure.

Early repayment requires a lump sum of funds. If the user's financial situation is not good, then early repayment will be quite stressful for the user.

6. It is not necessary to apply for early repayment.

Users who want to return provident funds early must apply at least one month in advance.

After submitting the application, the user also passes the bank's review.

Only when the bank agrees to the user's early repayment can the user perform the early repayment operation.

Some users do not meet the conditions for early repayment. At this time, it is not recommended for these users to repay early.

7. It can only save less interest.

For example, the user's loan repayment time has exceeded half of the loan term. At this time, the interest saved by early repayment is relatively small, which is not cost-effective for the user.

Summary.

If the user’s housing loan is a provident fund loan, it is not recommended that the user repay the loan early.

It is more cost-effective to repay a provident fund loan on time than to repay it in advance, and when users have sufficient liquidity in their hands, they can use it for investment, financial management and capital planning, so that they can calmly deal with future risks.

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Extended information:

Will it be affected if I resign after I have paid down my provident fund loan?

There will be no impact if you resign after your provident fund loan is disbursed. After your provident fund loan is disbursed, the Provident Fund Center will no longer examine your qualifications. As long as you can ensure sufficient repayment ability when you resign. There will be no problem, there will be no impact.

However, one thing needs to be noted. If you plan to handle provident fund hedging and loan repayment, do not leave your job before this business is handled, because the following conditions need to be met to handle provident fund hedging and loan repayment.

1. The provident fund account status is normal.

2. The provident fund account balance is sufficient.

3. The provident fund has been paid continuously for 12 months.

If you leave your job, your provident fund account will become sealed and the period of continuous provident fund payment will be interrupted. In this case, you will not be able to handle hedging business.

The provident fund loan and repayment policies will be different in various regions, so when handling the corresponding business, you can first consult the local provident fund center to understand the specific policies.