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How to manage and pay off your loan

Staying on track with your loan repayments can give you peace of mind, help you avoid fees and make sure your credit score isn’t damaged.

6 ways to manage your loan repayments

1. Include loan repayments in your budget

Treat your repayments like any other bill and account for them in your budget. This can help prevent you being left short the week before payday.

2. Set up a Direct Debit

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.

3. Check your account regularly

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 goes below a certain amount.

Explore: Online money management tools

4. Track loan repayments on the go

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.

5. Tell your lender if you can't make a loan repayment

If circumstances change and you’re struggling to keep up with your 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 personal 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.

6. Pay extra towards your loan, if possible

If you find you have some extra cash left over at the end of the month, you could overpay your personal loan. This can help you pay off your debt faster.

However, depending on the type of personal loan you have, there may be an early repayment charge (ERC). If this is the case, weigh up 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.

Can you pay off a loan early?

A lender must allow you to repay a loan early in full, but 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.

Does paying off a loan early affect your credit score?

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 could negatively affect your credit score. Although, any dip in your credit score is likely to be temporary and minor, and it could still be worthwhile trying to repay your loan early.  

Things to ask yourself before paying off a loan

Is paying off your loan financially worthwhile?

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. 

Can you comfortably afford to pay off your loan?

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?

Do you have higher-interest debts to pay?

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.

How to pay off your HSBC Personal Loan early

If you have an HSBC Personal Loan, you can repay all, or part, of the loan early with no early repayment charge.

You can do this by making a transfer online or through our mobile banking app. You can also call us or visit one of our branches. The loan will close automatically once the balance is zero.

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. 

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