Once you’ve received your loan funds, you enter the repayment period. Depending on the terms of your loan, you may or may not have a grace period during which no payments are due. If you’ve borrowed an installment loan, the repayment period includes installment payments due on specified dates, often one per month. Your installment loan from a direct lender will also have a final due date by which you’re expected to have repaid your loan in full.
No problems there. It’s also customary for lenders to impose late fees for missed installment payments. Customers expect this and accept it.
No Good Deed Goes Unpunished
On the other hand, many borrowers are shocked to discover that they’ve been punished for paying more than their designated monthly installments or paying off the entire balance before the final due date. That’s because many lenders assess stiff prepayment penalties. That’s right – a penalty for attempting to settle your debt early.
You may be thinking that such fees don’t make sense. And you’re right.
But for lenders that charge prepayment fees – they make perfect sense. After all, by paying your loan off early, you reduce the amount of interest you’re charged, thereby saving money on your overall indebtedness. That’s a good deal for you, but many lenders depend on borrowers stretching out their loans as long as possible to maximize profits. Borrowers who pay off loans early are literally cutting into their bottom line. Those prepayment penalties are actually a hedge to protect their profits.
The LoanNow Difference
Prepayment penalties are hard to justify – but lenders get away with imposing them because desperate borrowers with bad credit often feel fortunate to be approved for credit at all.
LoanNow is different. Borrowers who wish to make larger monthly installments or pay off their loans early aren’t punished by prepayment fees, either. In fact, borrowers who maintain a top-notch repayment record on their loans may be REWARDED with lower interest rates on future LoanNow loans.
Better Underwriting Equals Fewer Fees
How can we do this? Our proprietary online-based underwriting model evaluates borrowers and their loan applications individually, assessing a variety of financial and personal factors, not just FICO scores. As a result, we’re able to minimize our risk of default while quickly approving many borrowers that banks turn down.
If that sounds good, what are you waiting for? Apply for a no prepayment penalty, no collateral personal loan from LoanNow today.