Clear loans early to clear debt

According to the firm, over a fifth of lenders do not charge early redemption fees, meaning that consumers clear debt early will not pay a penalty for doing while saving on interest repayments.

Sean Gardner, chief executive of MoneyExpert.com, said: “Paying off a loan early makes sense as it cuts down your interest bill and helps you become debt free
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“But it can come at a price and while early redemption penalties can be a price worth paying it is better to avoid them entirely by taking out a loan which doesn’t charge fees. If you believe you will pay the loan off before the end of the term then research the market before you buy.”

He added that consumers taking out a loan should look at more than just the early redemption penalties, but states that they can be useful. Early repayment can typically help with debt management.