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Craig380 · 25-07-22, 08:13 AM

If the loan's at 7% then the amount owed is growing faster than anything you can get in savings, so I'd say it's definitely worth paying chunks off the capital as and when you can, rather than simply increasing the monthly repayments.

Both will accelerate paying off the loan, but paying a lump sum is more effective because if you pay off $16K in one go, on the next month the loan is only accruing interest on the remaining $34K.

In contrast, if you increase monthly repayments up to $1.7K, on the next month the loan is accruing interest on the remaining $48,300. So the total repayment amount will be lower with the lump sum.

25-07-22, 08:13 AM	#4
Craig380 Member Mega Poster Join Date: May 2015 Posts: 1,243	Re: Loan question (student) If the loan's at 7% then the amount owed is growing faster than anything you can get in savings, so I'd say it's definitely worth paying chunks off the capital as and when you can, rather than simply increasing the monthly repayments. Both will accelerate paying off the loan, but paying a lump sum is more effective because if you pay off $16K in one go, on the next month the loan is only accruing interest on the remaining $34K. In contrast, if you increase monthly repayments up to $1.7K, on the next month the loan is accruing interest on the remaining $48,300. So the total repayment amount will be lower with the lump sum.