Can I reduce the repayments on an existing interest free loan by making a lump sum payment?

Question

Can I reduce the repayments on an existing interest free loan by making a lump sum payment?

Answer 1

If you make a lump sum payment on an interest free loan then your repayments will be reduced.

On a normal loan the duration of the loan would be shortened.

So if its through a credit company like one you use to buy furniture then yes it will reduce the payments.

Answer 2

It depends on the terms of the loan. If you prepay, you might be allowed to pay less per month for the original length of the loan, or you might have to keep paying the same amount but for less time.

Assuming you have a written loan agreement, look and see what it says.

Answer 3

Not that i am aware of. I am pretty sure you can't do that. The lump sum will just come off of the total amount, then you will still need to make the weekly/monthly repayments.

You should talk to your bank, and find a way

Answer 4

umm.. ok thats confusing because you say that its interest free so the only payment you would be making is for the actual loan.. and any payment you make on that would reduce the balance, id hope :)