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If a loan has a pre payment penalty attached would it still be viable to retire it?
Webb2
It depends. One has to look at what the interest rate is, the amount of the term remaining, the amount of the prepayment penalty and the cost of the source of funds to pay it off. There is no one correct answer, sorry.
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∙ 18y ago
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Is it viable to retire a loan with a repayment penalty?
Only the borrower can answer that question.
If a loan has a prepayment penalty attatched to it would it still be viable to retire it?
It would depend on whether the savings gained by "retiring" the loan outweighed the disadvantages posed by the pre-payment penalty. Most loans have pre-payment penalties which expire after a short period of time. On mortgage loans, the typical pre-payment penalty runs 1, 3, or 5 years.
If a loan has a prepayment penalty attached to it could it still be viable to retire it and why?
Perhaps. The difference in the prepayment penalty and the amount of interest paid until the loan is satisfied is a major consideration. If the difference is small,early payoff might not be the best option.
If a loan has a pre-payment penalty attached to it would it still be viable to retire it?
No...and they make sure of that. Prepayments are there to make sure the Lender gets every penny they would have received if you stayed in the contract. Which means interest. If you pay out the loan you will pay interest and principle. Payments to your principle balance is equity.
If a loan has a prepayment penalty attached to it would it still be viable to retire?
If the pre-payment charge is considerably less than would be the amount of interest that would be paid through the duration of the loan, then it could be beneficial financially, but might also have a minor and temporary affect on the borrower's credit score.
If a loan has a prepayment penalty attached to it would it still be viable to retire it?
You need to compare the cost of the repayment penalty and the benefits of having the loan (such as deductible interest) vs. the benefits of paying off theloan such as increase cash flow. Do that analysis and determine the best use of your money.
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