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You can also repay all (or part) of the loan early to save money on interest.
Here, we look at:
6 ways to manage your loan repayments
Treat your repayments like any other bill and account for them in your budget. This can help you avoid running out of money before you get paid.
Arranging for your loan repayments to come out of your bank account automatically can help make sure they're always made on time. If you set up a Direct Debit, you won’t have to worry about forgetting to pay.
Make sure you have enough money in your current account to cover any loan repayments. If you’re an HSBC customer, you can set up text alerts when your balance drops below a certain amount.
Explore: Online money management tools
Your lender may have an app to make accessing your accounts easy, no matter where you are.
If you’re an HSBC customer, you can download the HSBC UK Mobile Banking app to check your balance and track payments on the go. Device restrictions apply.
If circumstances change and you fall behind on debt repayments, contact your lender as soon as possible. They’ll be able to work with you to help you find a solution. The further you fall behind, the harder it will be to get back on track, so it’s important to address the issue as soon as possible.
If you miss a payment or default on your loan, it can impact your credit score. This can make it more difficult for you to borrow in the future.
If you think it’s a long-term issue, ask for some breathing space while you seek independent help. Organisations, such as Citizens Advice and StepChange offer free confidential support and advice.
If you’re an HSBC customer, you can get in touch with us to talk about your options.
If you have some extra cash left over at the end of the month, you could overpay your loan. This can help you get out of debt.
However, depending on the type of personal loan you have, there may be an early repayment charge (ERC). If this is the case, consider whether the money you would save in interest by repaying early is greater than any charges.
If you have an HSBC Personal Loan, you can make as many overpayments as you like, without facing any fees or charges.
A lender must allow you to repay a loan early in full. However, they can issue an early repayment charge. Some loan providers may also charge additional fees. It's important to check the terms and conditions of the loan before you make an early settlement.
You can pay off your mortgage earlier than planned if you can afford to, reducing how much interest you pay and saving you money. You can either make a regular overpayment or make a lump sum payment.
There’s no penalty for clearing your student loan early. You can either make extra student loan payments or pay it off in full.
It can be a weight off your shoulders, but you should check when the loan will be written off before doing so. It might also make sense to think about any other debts you have first before paying off your student loan.
Paying off your loan early can save you money on interest. However, if there are fees or early repayment charges, it may end up costing you more.
If you were to pay off your loan, could you still afford your everyday expenses and other bills and have some savings left over as an emergency fund?
Credit cards typically carry higher interest rates than personal loans. A cost-effective option could be to pay off expensive debts first – as they’re charging you the most to borrow the money. You’ll still need to meet the minimum repayments on all your debts.
Explore: Should you save or repay debts?
Making regular loan repayments for the term of the loan can help improve your credit score, as it shows you’ve got your finances under control.
Paying off a loan early means you'll no longer have a record of making these regular payments each month. In some cases, paying off a loan early may result in a temporary and minor dip in your credit score. However, it could still be worthwhile trying to repay your loan early.
You can repay your loan in full at any time by giving us notice in writing, through the mobile app, by visiting a branch or by calling us on 03457 404 404.
Once you’ve given us notice, we’ll give you a settlement figure. You must pay all the amounts owed if you want to close the loan.
At the start of your loan, we will work out the amount of interest we can charge. Regulations set out the formula we need to use to work this out.
The formula allows us to charge daily interest from the date we gave you the loan up until 28 days after we receive your notice that you want to repay all of the loan early. It also allows us to charge an additional month of interest if your loan agreement said that your loan was repayable over a period of more than 12 months.
Usually, the amount of interest we can charge will be reduced as a result. In these cases, we’ll refund you the difference between the interest included in the total amount payable and this reduced amount of interest. We will refer to this refund as a ‘rebate’ in our communications with you.
Sometimes we might not reduce the amount of interest we can charge. This could happen where your loan lasts longer than we state in your loan agreement. For example, where you have selected a repayment date that is later than one month after we give you the loan, and as a result your first repayment is delayed, or you have been late making your monthly payments.
If this happens, your monthly repayments towards the start of the loan will pay off more of the interest amount compared to if your loan lasted as long as we state in your loan agreement. But we’ll never actually charge you more interest than is included in the total amount payable. So once you’ve paid the amount of interest included in the total amount payable, your remaining monthly repayments will just pay off the loan amount.
This is why we might not reduce the amount of interest we can charge. Because even though you’re repaying your loan early, the full amount of interest will have already been paid or become payable.
How to close your HSBC Personal Loan using mobile or online banking.
If you repay part of the loan early, your monthly repayments will stay the same, but you may repay the loan quicker and reduce the amount of interest you have to pay in total.
You can do this by making a transfer online or through our mobile banking app. You can also contact us or visit one of our branches.
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