Most personal loans do not charge a fee for paying off the balance early, though some loan agreements still include this type of fee in their terms. Loans through Upstart carry no prepayment penalty, so you can pay off your balance early without an extra charge4.
What does a prepayment penalty look like?
A prepayment penalty is a fee some lenders charge when you pay off a loan faster than the original schedule allows. These fees exist because lenders lose the interest they expected to collect over the full loan term, so a small number build in a charge that usually shows up as:
- A percentage of the remaining balance
- A flat dollar amount
- A set number of months’ worth of interest
It’s disclosed in the loan agreement before you sign.
What should you check before signing?
Paying off a loan early usually saves money on interest, but only if there’s no penalty eating into those savings. Before signing any loan agreement, check the payoff section for language about:
- Early payment fees
- Percentage caps
- Minimum interest requirements
Some loans also distinguish between partial prepayments and paying off the full balance, so read both scenarios carefully. If you plan to pay ahead of schedule, ask the lender directly whether an early payoff fee applies and get the answer in writing before you accept the offer.
Do personal loans have origination fees?
