Avant personal loan

J

Jim_tpb

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Avant have a personal loan product with APR of 6.8% for loans of 20k to 75k.

I only wish to take a loan of about 10k but this pushes the APR to 8.7%.

Is there anything preventing me from taking out the loan of 20k and then immediately paying off 10k of it, leaving me with a 10k loan with 6.7% APR?
 
Aren't their loans fixed rate in which case accelerated repayments may not be allowed at all or only with penalties?


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Well, check it out with Avant. But I suspect you'll find that the "no early repayment fees" promise only applies to such early repayments as the term of the loan permit, and that will be quite limited.

Otherwise the floor of 20k would be meaningless; anybody wanting to borrow less than 20k who prefers to pay 6.8% rather than 8.7% (i.e. everyone) would do exactly what you suggest.
 
If loan repayments are fixed then early repayment might not result in recalculation of the loan - i.e. you'll pay it off sooner than the expected term but the repayment will remain calculated on the basis of it being 20k being paid back over the term.

So for relative demonstrative purposes (i.e. figures aren't specifically accurate), if borrowing 20,000 over x years at 6.8 works out at say 600 a month, but borrowing 10,000 over x years at 8.7 works out at say 350 a month, if you take out the 20k and immediately pay back 10 you'd still be paying 600 a month rather than 350 a month. The interest rate will be better and you'll pay it off quicker but the repayments will be significantly higher in liquid cash payment terms.
 
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