There is no intuitive risk in repaying a loan early. Repaying a loan early is a relatively normal behavior. At most, you only need to pay some liquidated damages. However, repaying a loan early will consume a large amount of idle funds and reduce the family's ability to resist risks. Secondly, there is a possibility of inflation of funds. From some perspectives, repaying a loan early is not a good choice and lenders should consider it themselves.

Early repayment procedure

1. The borrower first checks the requirements for early repayment in the loan contract and pays attention to whether early repayment requires liquidated damages;

2. Call the lending bank to inquire about the early repayment application time, required information, etc.;

3. Follow the requirements of the lending bank to submit an early repayment application to the relevant department;

4. The borrower brings relevant information to the lending bank to handle the early repayment procedure;

5. Deposit the early repayment amount into the repayment account and wait for the bank to deduct it, or bring cash directly to the Loans are repaid.

Under what circumstances is it not recommended to repay the loan early

1. Use provident fund loans or enjoy larger discounts when borrowing.

As of now, the provident fund loan interest rate for five years or more is 3.25, and the commercial loan benchmark interest rate is 4.9. Coupled with discounts, the execution interest rate has reached 4.165, which can be said to be a very low level. Since you have already enjoyed lower interest rate discounts and are currently in the process of interest rate cuts, it is more cost-effective to use the idle funds in your hands to do some financial management. On the contrary, if you repay the loan early, you will have to pay a high penalty according to the contract.

2. One-third of the equal principal repayment period has passed.

Equal principal payment means dividing the total loan amount into equal principals, and calculating the repayment interest based on the remaining principal. In other words, the later this method reaches, the less principal will be left and the less interest will be generated. If you have repaid more than 1/3, it means that you have repaid nearly half of the interest. What you will repay in the later period is more of the principal. The level of interest has little impact on the repayment amount.

3. The equal repayment of principal and interest has reached the mid-term.

Equal principal and interest is to add the total principal and interest of the mortgage loan and then spread it evenly into each month. In other words, the proportion of principal in the monthly repayment increases month by month, and the proportion of interest decreases month by month. By the middle of the repayment period, most of the interest has been repaid, so there is little point in repaying the loan early.