Taking out a personal loan is a common financial decision for many, especially when you need to cover unexpected expenses or consolidate debt. Best Egg, a popular online lender, offers personal loans at relatively competitive rates and with flexible terms. However, one question that often comes up is, “Can you pay off a Best Egg loan early?”
In this blog post, we will dive deep into the details of paying off the Best Egg loan early, the potential benefits, drawbacks, and what you need to know before taking that step.
What is a Best Egg Loan?
Best Egg offers unsecured personal loans ranging from $2,000 to $50,000 with fixed interest rates and repayment terms that typically range from 36 to 60 months. The company provides loans to individuals for a variety of purposes, including debt consolidation, home improvements, medical expenses, and other personal needs.
Unlike secured loans, Best Egg loans do not require collateral, and the loan approval process is typically fast and convenient, especially with their online platform. The application process involves submitting an online form, undergoing a soft credit check, and potentially providing documentation of income and financial history.
Once approved, the funds are usually disbursed quickly, often within one or two business days.
Paying Off a Best Egg Loan Early: Is It Possible?
The short answer is yes, you can pay off your Best Egg loan early. Like most personal loans, Best Egg loans allow you to make additional payments or pay off the entire loan balance ahead of schedule. Early repayment can be a great option if you want to save on interest or pay off your debt sooner. However, there are a few important factors to consider before making early payments.
Why Should You Pay Off Your Best Egg Loan Early?
There are several advantages to paying off your loan early. Here are some key reasons why you may want to consider it:
Save on Interest Payments
One of the main benefits of paying off your loan early is the ability to reduce the amount of interest you pay over the life of the loan. Best Egg personal loans come with fixed interest rates, which means you will pay the same interest rate throughout the loan term. If you make early payments, you reduce the principal balance faster, which means less interest accrues.
For example, if your loan is $10,000 with a 12% APR and a 36-month term, the total interest paid over the life of the loan would be higher if you stick to the scheduled payments. However, if you pay off the loan early, you could significantly reduce the total amount of interest.
Free Yourself from Debt Sooner
Paying off a Best Egg loan early gives you the financial freedom to move on from debt faster. Without monthly loan payments weighing you down, you can allocate those funds toward other financial goals like saving, investing, or planning for the future.
Improve Your Credit Score
Making early payments can positively impact your credit score. Reducing your debt-to-income ratio and lowering the total amount of outstanding debt can help boost your credit score over time. This could be beneficial if you plan to apply for other loans or credit in the future.
Peace of Mind
Being free from debt can provide a significant sense of relief. If you have the means to pay off your loan early, it can reduce financial stress and give you peace of mind, knowing that you no longer owe money to the lender.
Are There Any Fees for Paying Off a Best Egg Loan Early?
The good news is that Best Egg does not charge prepayment penalties for paying off your loan early. This is a significant advantage, as many lenders impose fees or penalties when borrowers choose to pay off their loans ahead of schedule. With Best Egg, you can pay off your loan without worrying about extra costs or financial penalties.
However, there are some important things to keep in mind when paying off a loan early:
Interest May Be Prorated
While you may save on interest by paying off your loan early, Best Egg’s terms might result in interest being calculated based on the days you have the loan balance. This means you may not save as much interest if you pay off your loan in the middle of the billing cycle, as interest could still be charged for the partial month.
It’s always a good idea to contact Best Egg directly to clarify how early repayment will impact your interest.
Consider Refinancing (If Applicable)
If you’re paying off your Best Egg loan early because you want a better interest rate or more favourable terms, consider refinancing options. Refinancing involves taking out a new loan with a lower interest rate or better terms to pay off your existing loan. This can help you save money in the long run if you qualify for better rates.
However, refinancing may not always be necessary, especially if your primary goal is simply to pay off the loan early and reduce your debt.
What Are the Drawbacks of Paying Off Your Best Egg Loan Early?
While paying off a loan early has many benefits, there are a few potential drawbacks to consider:
Impact on Cash Flow
Paying off a loan early means allocating a significant sum of money toward the debt. If this leaves you with limited funds for emergencies or other financial needs, it could negatively impact your cash flow. Make sure you have an emergency fund or other savings in place before paying off your loan early.
Opportunity Cost
By paying off your loan early, you are using funds that could otherwise be invested elsewhere. Depending on your financial situation, it might make more sense to invest that money in higher-yield assets (like retirement accounts, stocks, or real estate) rather than paying down a low-interest loan early. It’s important to assess your overall financial strategy before making a decision.
No Immediate Tax Benefits
Unlike mortgage interest, personal loan interest is typically not tax-deductible, so paying off a Best Egg loan early does not come with any tax benefits. Therefore, the decision to pay off the loan early will be more about managing personal finances than benefiting from tax breaks.
How to Pay Off Your Best Egg Loan Early
If you’ve decided to pay off your Best Egg loan early, here’s how to do it:
Review Your Loan Statement
Check your loan statement to determine the current balance on your loan. Make sure to account for any accrued interest and confirm the total payoff amount. You can do this by logging into your Best Egg account or contacting customer service.
Make the Payment
You can make additional payments or pay off the loan in full through your online account. Select the option to pay off the balance and follow the instructions. Be sure to make the payment via a secure method, like a bank transfer or direct payment.
Confirm Your Payment
Once you’ve made the payment, it’s important to confirm that your loan has been paid off. Keep an eye out for a notification from Best Egg confirming that the loan balance is zero. You should also ensure that no additional interest or fees are added to your account after the early payment.
Monitor Your Credit Report
After paying off the loan, it’s a good idea to monitor your credit report to ensure that the loan is marked as “paid in full.” This can help improve your credit score and ensure that your payment history reflects the early payoff.
Conclusion
In summary, yes, you can pay off your Best Egg loan early, and doing so can offer a range of benefits, including saving on interest, reducing debt faster, and achieving financial freedom. Best Egg does not charge prepayment penalties, so you can pay off your loan without worrying about extra fees.
However, it’s essential to weigh the advantages and drawbacks before making an early repayment. Make sure that paying off the loan early aligns with your overall financial goals, and consider factors like cash flow and opportunity cost before using a large sum of money to pay down the loan.