A solid step toward building a strong financial foundation includes paying off any outstanding debts. Borrowers who are eager to resolve their debts may be interested in paying off their loans early. Early repayment on a loan – paying the loan back before its maturation date or term end date - can allow a borrower to save on interest that would accrue over time as the loan is open, and once the loan is paid off the borrower may have more cash flow available to pay down other debts or to build up his or her savings. Before deciding to pay off a loan early, borrowers should make sure they understand their loan terms. Lenders sometimes impose limitations on early repayment to protect the profit they earn from making the loan.

Borrowers should first determine whether or not the loan can be repaid early. Some lenders do not allow early repayment, and this is set forth in the terms of the loan agreement. In other cases, lenders will allow early repayment, but a penalty fee may be imposed. These penalties are typically referred to as prepayment penalties and are also established within the terms of the loan agreement. A borrower may find that they are allowed to pay the loan off early, but interest on the full term of the loan is still required to be paid. In circumstances such as this, early repayment may free up cash flow for the borrower earlier, but the borrower will not be saving money since the full interest amount must still be paid. Although such terms can be frustrating for borrowers, lenders include these limitations to ensure they earn a profit for the service of making the loan to the borrower. Allowing early repayment with no penalties and no interest reduces the lender’s earnings on the service they are providing.

When considering loan options, a borrower should understand all the requirements and terms of the loan, including any restrictions or limitations on early repayment. Even if borrowers are uncertain at the time of application whether they may later want to repay the loan early, it is important to understand that situations can change and that further down the road, they may be in a better place financially to consider early repayment. A prepayment penalty or total restriction on paying off a loan early should be taken into consideration when determining the total cost of a loan.

Borrowers should carefully consider their need and ability to meet repayment obligations before deciding to take out a loan. Before applying for a loan, borrowers should research all loan options and lenders available to them, to ensure they are choosing the best financial product for their unique situation. Borrowers should read loan agreements carefully and make sure they understand all terms before signing the loan document. It is important for consumers to borrow responsibly to protect their financial future.


The content on this site is for informational purposes only and is not professional financial advice. Blue Trust Loans does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation.

Hummingbird Funds, LLC is a sovereign enterprise, an economic development arm and instrumentality of, and wholly-owned and controlled by, the Lac Courte Oreilles Band of Lake Superior Chippewa Indians (the “Tribe”), a federally-recognized sovereign American Indian Tribe. This means that the Hummingbird Funds’ installment loan products are provided by a sovereign government and the proceeds of our business fund governmental services for Tribe citizens. This also means that Hummingbird Funds is not subject to suit or service of process. Rather, Hummingbird Funds is regulated by the Tribe. If you do business with Hummingbird Funds, your potential forums for dispute resolution will be limited to those available under Tribal law and your loan agreement. As more specifically set forth in Hummingbird Funds’ contracts, these forums include informal, but affordable and efficient Tribal dispute resolution, or individual arbitration before a neutral arbitrator. Otherwise, Hummingbird Funds is not subject to suit or service of process. Neither Hummingbird Funds nor the Tribe has waived its sovereign immunity in connection with any claims relative to use of this mobile site. If you are not comfortable doing business with a sovereign instrumentality that cannot be sued in court, you should discontinue use of this website.