Additional repayments

Making additional repayments beyond what's required in your minimum monthly repayment is one of the best ways to reduce the total interest paid and term of your loan. As a rule of thumb, every $1 in extra repayments you make early in the life of your loan saves around $2 in interest over the term of the loan, depending on the level of interest rates. Consider either one-off lump sum payments when you have spare cash or commit to increasing your regular repayment amount. However, make sure that your loan allows you to make additional repayments without penalty. Fixed-rate and basic (or ‘no-frills' loans) often have restrictions on extra repayments or charge a fee for the privilege. Use BankChoice's Extra repayments calculator or Lump-sum repayment calculator to determine how much time and money can be saved.

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