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EARLY REPAYMENT: AVOIDING PENALTY INTEREST 7/2/2007

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EARLY REPAYMENT: AVOIDING PENALTY INTEREST

HAVE YOU EVER CONSIDERED PAYING OUT YOUR LOAN EARLY ?
HAVE YOU SEEN THE MASSSIVE PENALTIES INVOLVED ?
SEE HOW YOU CAN AVOID EARLY PAYOUT PENALTIES

Most lenders charge a ‘penalty’ of usually 3 months interest on the outstanding balance if you decide to pay out your loan earlier than the original scheduled date.

Example:
Outstanding balance after 10 years = $235,916 . 54 ( see earlier schedule ).
Early Payout after 10 years = 3months penalty interest on outstanding balance.
Current interest rate = 7%
Early payout penalty = $235,916 . 54 X 7% X 3 = $49,542 . 47 = $4,128 . 54
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Suggestion :
In the month prior to the early payout, reduce the outstanding balance to as small an amount as possible (say $1,000).

Example:
Early payout penalty = $1,000 X 7% X 3 = $210 = $17 . 50
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Saving in penalty interest = 4,128 . 54 - $17 . 50 = $4,111 . 04

Author Name
Kevin Nowland -

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