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Credit card debt is now the most widely held form of debt, according to the most recent Survey of Consumer Finances from the Federal Reserve . This means owing money on credit cards is incredibly common. And credit card debt can, unfortunately, add up quickly, especially when finance charges are thrown into the mix.

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Now, simply using a credit card or having a balance on your credit card isn’t necessarily a problem—as long as you consistently pay your statement balance in full at the end of each billing period. In fact, if you just use your credit card for convenience or to earn rewards, and then pay the balance every month, then you’re probably all set.

Congratulations! The rest of us, though—the 65% of credit card users under the age of 50 who carry credit card debt from month to month—have a revolving door of debt. And that’s where the problem occurs.

Even if you’re making minimum payments, credit card debt can stay with you for years, as interest accumulates on the existing balance. The fastest way to pay off credit cards might be to make a payment plan or to consolidate the debt with a personal loan.

How Credit Card Debt Works Against You

The average annual percentage rate (APR) on a credit card, across all commercial accounts in the country, was 13.16% at the end of 2017 . But on accounts that have started to accrue interest, the average APR was higher, at 14.99%.

The problem is that even if you make the minimum payment on your credit card bill, the remainder of the balance still accrues interest, and that starts to add up. Not to mention if you miss a minimum payment, you’ll see added fees and penalties.

And more than two missed payments will likely cause your interest rate to go up. Once your interest rate goes up, it will likely stay there until you make at least six on-time payments. (This is all in the fine print of the credit card terms, which most of us immediately throw out.)

Think of it like this: Most credit cards charge compounding interest either monthly or daily, meaning you actually pay interest on the interest charges as it adds up. For example, if your credit card APR is 10%, then your daily periodic rate is 10% divided by 365 days — in this case, 0.027%. If your interest compounds daily, then credit card companies use that daily periodic rate to calculate the interest you owe every day you have a balance.

For example, if you carried a $5,000 balance at a 10% APR for 30 days past the due date, then you’d be charged 0.027% (the daily periodic rate) x 30 days x $5,000 (the amount you owed each of those days), which comes out to $40.50 in interest for the month. Add that to your balance, and if you don’t pay it off, then you’ll owe more interest on that new amount.

The fastest way to pay off credit card debt is to pay the full balance—including all the interest that has compounded. Of course, that’s not always possible. If you have a credit card balance that is growing with interest charges every month, then you need to start thinking about a pay-off plan to get out of debt.

Make a Plan to Get out of Credit Card Debt

To figure out how long it’ll take to pay off your credit card, you have two options. First, you can figure out how much you can afford to pay each month, and then calculate how long it’ll take to pay off your debt. Or you can decide when you want your credit card paid off by, and then calculate how much you need to pay each month in order to meet that goal.

Because you need to factor in the compounding interest rate while you pay off your debt, it can get complicated trying to figure out how long it’ll take to get out of credit card debt. You can do the math yourself, but it’s often easiest to use a credit card payoff calculator to figure out a payment plan that makes sense. You can also consult our Credit Card Interest Calculator to see how much interest you will pay on your debt.

Think of it like this: Say you have that same $5,000 balance from above at 10% APR, which works out to a daily interest rate of 0.027%. Based on that daily interest rate, in the first month you owe $40.50 in interest, making your new balance $5,040.50.

If you didn’t make any payments, it would just keep accruing interest. But let’s say you decide to make monthly payments of $200 to slowly pay down the balance. That first month, $40.50 of your $200 goes toward interest and $159.50 goes toward your $5,000 balance. Now, the second month you only owe $4,840.50.

For the second month, you calculate your interest at the same daily interest rate (0.027%) for 30 days and you owe $39.21 in interest, so more of your monthly payment will now go toward the principal. You can see how your $200 monthly payments ultimately dwindle down the balance—as long as you don’t charge any more to your credit card.

But if you’re making $200 payments every month, it would still take 29 months to pay off your $5,000 debt. And you’d ultimately end up paying $630 in interest on top of your initial balance. But if you take that same amount of debt and APR, and make a budget to pay it off within a year, then it’d take a monthly payment of $439, and you’d only pay $274 in interest—saving yourself money in the long run.

Once you figure out what monthly payment you can afford, incorporate debt payoff into your budget. If you have debt on multiple credit cards, then you may want to start by paying off the one with the highest interest rate (while still making minimum payments on all your debt to avoid penalties).

Once you’ve paid off your debt on the highest interest card, you can work on paying off the card with the next highest interest rate, and so on. If managing a payment schedule with multiple credit cards seems overwhelming, it might be simpler to consolidate your credit card debt with a personal loan.

What is the Fastest Way to Pay off Credit Card Debt?

The fastest way to pay off credit cards might be with a personal loan. If you have mounting credit card debt, then a personal loan can actually make your debt cost less.

A personal loan gives you the chance to consolidate and pay off your credit card debt. You essentially use the personal loan to pay off your credit cards. Then all you have to worry about is paying off the personal loan in monthly installments.

But personal loans don’t accumulate compound interest in the same way as credit cards. That means as long as you make the monthly payments, your debt won’t increase—no complicated math necessary. Additionally, if you have good credit, your personal loan interest rate can be more reasonable than the rate on your credit card. (Use our personal loan calculator to see how much you’d save paying off your debt with a personal loan.)

And you can decide on manageable loan terms with your lender, so that you’re making monthly payments you can afford. SoFi offers three, four, five, six and seven-year personal loan terms. Typically, the longer your loan term, the lower your monthly payment (though you may pay more in interest).

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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When it’s time to start repaying your federal student loans, your options can be confusing. It’s not as simple as sending your loan servicer a universally fixed payment or paying whatever you think you can afford. How much you owe each month can vary dramatically depending on how you choose to repay your loans.

The government currently offers eight repayment plans that let you knock out your student loans in as little as 10 years or as many as 30 years. Five of the options take into account how much money you make. Income-driven repayment plans are geared toward making the process affordable for everyone, but each is slightly different.

Choosing the right plan depends on many factors, such as the types of student loans you have, when you took them out, and how much you are making. You can switch plans anytime over the life of your student loans as your circumstances and income change.

Income-driven repayment plans may lower your monthly payment, which can be a lifesaver. But keep in mind that if you lower your monthly payment you might be done by extending the length of the loan. If that is the case, you’re also likely to pay more overall, because the interest adds up over a longer period.

Here’s a roadmap to understanding income-driven repayment and which plan is right for you.

What is an income-driven repayment plan?

An income-driven repayment plan makes your monthly student loan payments affordable by tying them to how much money you earn. These types of student loan repayment plans allow you to take more time repaying your loans than most plans that aren’t tied to your income. Most of them forgive the remainder of your student loans as long as you make the required payments for 20 to 25 years (but keep in mind you may have to pay taxes on the forgiven amount).

Your monthly payment under each plan will change each year depending on your situation. Four of the income-driven plans calculate your monthly student loan payment based on your discretionary income , which is defined as the difference between your annual income and either 100% or 150% of the poverty line .

Your monthly payment is recalculated every year based on your current income, family size, and in one case, the amount of your student loans. (There’s also an income-sensitive repayment plan which bases your payment on gross annual income.) You can figure out how much you’d pay under each plan on the Department of Education’s website .

Types of Income Driven Repayment Plans

Here are five income-based repayment plans that you can choose from:

Revised Pay As You Earn Repayment Plan (REPAYE)

● Your monthly payment is generally 10% of your discretionary income and is recalculated each year.

● Any remaining student loan balance will be forgiven in 20 or 25 years.

● This applies to Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans to students, and Direct Consolidation Loans, that don’t include Direct PLUS Loans (Direct or FFEL) taken out by parents.

Pay As You Earn Repayment Plan (PAYE)

● Your monthly payment is generally up to 10% of your discretionary income, but never more that the 10 year Standard Repayment Plan amount, and is recalculated each year.

● Any remaining student loan balance will be forgiven in 20 years.

● This applies to Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans to students and Direct Consolidation Loans that don’t include Direct PLUS Loans (Direct or FFEL) taken out by parents.

Income-Based Repayment Plan (IBR)

● Your monthly payment is generally 10% or 15% of your discretionary income, depending on when you became a borrower, but never more that the 10 year Standard Repayment Plan amount. The amount is recalculated each year.

● Any remaining student loan balance will be forgiven in 20 or 25 years.

● This applies to Direct Subsidized and Unsubsidized Loans, all PLUS Loans to students, Subsidized and Unsubsidized Federal Stafford Loans, and Consolidation Loans (Direct or FFEL) that don’t include Direct PLUS Loans take out by parents.

Income-Contingent Repayment Plan (ICR)

● Your monthly payment is whichever is less: 20% of discretionary income or the amount you would pay if you spread your payment evenly over 12 years, adjusted based on income and is recalculated each year.

● Any remaining student loan balance will be forgiven in 25 years.

● This applies to Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans to students, and Direct Consolidation Loans.

● This is the only income-based repayment option for parents who took out Direct PLUS loans. They can access this plan by consolidating them into a Direct Consolidation Loan.

Income-Sensitive Repayment Plan

● Your monthly payment is based on your annual income, with the formula varying depending on your lender.

● You have 10 years to repay the loan.

● This applies to Subsidized and Unsubsidized Stafford Loans, FFEL PLUS Loans, and FFEL Consolidation Loans

How to Qualify for Income-driven Repayment

You’re not eligible for an income-driven repayment plan if you’ve defaulted on your student loan. (If you’re in that situation, there are options for getting out of default.

Anyone who has taken out eligible federal student loans can opt in to the REPAYE and ICR plans. To be eligible for the PAYE plan there are additional requirements to qualify. First, you need to be a ‘new borrower’ as of Oct. 1, 2007 and have received a loan disbursement on or after Oct. 1, 2011 You are considered a new borrower if you had no outstanding balance on a Direct Loan or FFEL Program loan on or after Oct. 1, 2007.

In addition, you can only qualify for the PAYE and IBR plans if your monthly payment is lower than what you would pay under the Standard Repayment Plan, which spreads your balance over 10 years. That means you’re generally eligible if your student loan balance represents a major chunk of your annual income or exceeds it.

What student loan repayment options exist besides income-driven repayment?

If you work in public service, you qualify for an even better deal: Public Service Loan Forgiveness . Under the program, you need to make 120 qualifying monthly payments under an income-driven repayment plan, working for a qualified employer and your remaining balance is eligible to be forgiven.

Related: 20 Year Student Loan Refinance vs Income-Driven Repayment

The payments don’t have to be consecutive, but if they are, you could be free of your student loans in 10 years. Some eligible employers include various levels of government, a 501(c)(3) nonprofit, even an organization that provides certain public services, such as law enforcement, public interest legal services, the military, public health, and more.

If you’re not in public service and an income-driven repayment isn’t right for you, that doesn’t mean you’re stuck with impossibly high payments. One option is to choose the Extended Repayment Plan, which lets you spread your student loans over 25 years and pay a fixed or graduated amount each month.

A second option to consider if you’re having trouble paying your student loans because of a temporary situation (say you went back to school or can’t find a job), is applying for deferment or forbearance . These are short-term solutions may reduce your student loan payments for a limited time.

Another option is consolidating your student loans. Consolidation may give you more time to repay your student loans or lower your interest rate.

A Direct Consolidation Loan from the federal government can also give you access to income-driven repayment programs that you might not have otherwise qualified for based on the student loan you had. (Keep in mind that consolidating your student loans may force you to give up credits you’ve earned toward loan forgiveness.)

Another potential way to save money is student loan refinancing. A private lender may help consolidate both federal and Private student loans to provide a new interest rate based on your credit and current finances. That could substantially reduce the interest you pay on your student loans, but it disqualifies you from federal student loan benefits, such as income-driven repayment and public service forgiveness plans.

Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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Many lenders—including both online lenders and brick-and-mortar banks—advertise guaranteed-approval personal loans. Also known as payday loans, guaranteed personal loans are usually secured by your paycheck. Basically, lenders use this type of loan to approve anyone, regardless of his or her credit score. Some lenders will offer cash on the same day that you apply for the guaranteed personal loan, even without checking your credit.

These offers can sound appealing, especially if you have shaky credit, don’t have savings to fall back on, or need money immediately for a financial emergency. But unfortunately, guaranteed-approval personal loans usually come with a catch. Often the only sure thing with a guaranteed personal loan is that you are more likely to owe more than you bargained for down the line. They usually come with high interest rates, among other extremely unfavorable terms.

It may feel like taking out a guaranteed personal loan is your only choice, but you have other options. Consider asking family or friends for help, requesting an advance from your employer, or applying for emergency help from a local community organization. If those options aren’t available to you, try applying for an unsecured personal loan.

Lenders offering unsecured personal loans won’t guarantee your approval, but many, including SoFi, look at more than just your credit score to determine your eligibility and you may be surprised to find that you still qualify.

Further, many online lenders are trying to make the process of getting funded for unsecured personal loans quicker as well. If you do, taking out an unsecured personal loan can be a safer bet for getting the cash you need now without paying dearly for it later.

The Drawbacks of Guaranteed Personal Loans

Guaranteed-approval personal loans may indeed get you money fast, but we all know there’s no such thing as a free lunch. The repayment terms you may be stuck with will often be extremely disadvantageous, even predatory.

For example, lenders who offer guaranteed loans could ask you to repay the debt in a matter of weeks. If your finances don’t improve and you can’t pay back the loan, your debt could grow exponentially. Guaranteed personal loans might even charge the equivalent of 400% interest . So if you’re already having a tough time financially, taking out a payday loan can be on slippery slope.

Unsecured personal loans, on the other hand, aren’t secured by personal assets to recover in case of default, which is why lenders are more careful about who they lend to.

Why an Unsecured Personal Loan Might Cost Less

The easy money that comes with a guaranteed-approval personal loan can bear a high cost. When you take out a payday loan, you might end up paying $10 to $30 for every $100 borrowed. That means if you borrow $300, you could have to pay back up to $390 in a short period of time. And if you don’t pay the loan off completely, you could face additional fees.

An unsecured personal loan is not guaranteed-approval, but it could cost you less in the long run. Unsecured personal loan rates usually aren’t as low as interest rates on some student loans or mortgages, but they could still be lower than rates associated with payday loans.

Furthermore, taking out an unsecured personal loan can come with a more reasonable repayment timeline that could help prevent you from falling into default or mounting high-interest debt.

What does SoFi consider when issuing personal loans?

SoFi offers unsecured personal loans from $5,000 to $100,000 with low fixed interest rates and flexible repayment terms. You won’t have guaranteed approval, but SoFi takes a number of factors into account to make sure all applications are fairly considered.

SoFi looks not just at your credit score but also at your financial history, your monthly income and expenses, your career experience, and your current employment. If you qualify, a personal loan can be a more responsible and less costly way to deal with a financial emergency.

SoFi Lending Corp. or an affiliate is licensed by the Department of Financial Protection and Innovation under the California Financing Law, license number 6054612.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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There are few things more exciting than finally meeting the love of your life after suffering through blind dates and swiping right on your share of mismatches.

Whether you get engaged after dating for seven months or seven years, planning a wedding with your person is exhilarating. But it’s also not cheap. Planning your big day means coming to terms with some bracing cost realities. Before you start, you’ll want to understand how much things typically cost and ways you and your partner can manage to pay for it all.

Obviously, everyone’s wedding is different. You might not need a doughnut bar AND a chocolate fountain, and you can opt to have your uncle run the photo booth, but you might still end up having to pay for things like food and a venue.

According to a study by The Knot , which polled nearly 13,000 couples who wed last year, couples spend an average of $33,391 on their weddings. And that doesn’t even include the honeymoon! The good news? That number is actually down a little from a high in 2016, when the average came out to $35,329.

If that amount is making you sweat or wonder what else you could buy with all that cash, don’t worry. You don’t need to have all the wedding bells and whistles. We’ll walk you through a wedding cost breakdown that will help you see where you can save.

What Goes Into the Cost of a Wedding?

So, where does all that money go? There are so many costs that just don’t come to mind right away. This wedding cost breakdown will help you see where almost every penny is spent. (Most of these totals are courtesy of The Knot and have been rounded when necessary.)

First, the biggest chunk of cash goes, unsurprisingly, toward the venue. Including the space and rentals you need to fill the space (tables, chairs, etc.) couples spend an average of nearly $15,200.

For catering costs, most couples pay about $70 per guest. For a 100-person wedding, that’s about $7,000.

The engagement ring can also set you back a cool $5,700 on average. Brides also spent an average of $1,500 on their wedding dresses.

Couples often pay big money for things like the reception band which can cost around $4,000, or if you choose a reception DJ it can come in around $1,200, flowers at about $2,400, and the ceremony site, separately from the reception venue, which might cost around $2,300.

Documenting the wedding can be yet another big expense. Photos can set you back an average of $2,600. And a videographer will be an additional $1,900.

And then there’s all the little things that add up. A wedding planner costs an average of almost $2,000, the rehearsal dinner typically costs about $1,300, and hair and makeup averages another $1,000.

Related: The Cost of Being in Someone’s Wedding

The rest of the costs are that couples were surveyed on were under $1,000, but they add up. You can estimate about $800 for transportation, $540 for your wedding cake, $400 for invitations, $280 for the groom’s suit, and $250 for favors.

One way to lower your costs could be to decrease the number of guests you invite, since the average cost per guest is up to $268 per person. The cost per guest is so high these days because plenty of couples decide to spend money on sparklers, selfie booths, lawn games, and other fun reception additions. So, if you want to keep your costs in check, you might have to skip some of the extras, too.

Who usually ends up paying for the wedding?

These days, figuring out who pays for the wedding (and how) can sometimes be unclear. Back in the day, the bride’s family was expected to pick up the whole tab, but that’s pretty antiquated at this point.

Now it’s much more common for both families to chip in, but often the couple pays for a large part of the costs on their own. In fact, The Knot reports that couples pay for 41% of wedding costs themselves.

If you and your partner are on the hook for 41% of the wedding, then going based on the average costs, that will be about $13,690. That’s not pocket change. Given that many parents might not be able to contribute financially to the wedding, you could be looking at a much larger bill.

Looking into Smart Wedding Financing Options

A bigger question than who pays for the wedding is: How do they pay for the wedding? Often couples use their savings. But not all couples have cash sitting around that they can easily tap into. And even if you do, you don’t necessarily want to deplete your emergency fund or take money away from saving for a down payment on a house.

That’s why taking out a wedding loan or turning to some kind of wedding financing option can make sense. Usually couples end up charging wedding expenses to a credit card, but paying off that balance can be pretty costly. The average interest on a credit card is around 16%. Do you really want to be paying 16% interest on your entire wedding? The fact that all the deposit costs come at the same time makes it even more difficult if you’re charging everything to a credit card.

Related: If you have credit card debt, consult our Credit Card Interest Calculator and find out how much you are paying in interest alone.

You have to deal with credit card maximums, and to keep your favorable credit score, you should only use 20% to 30% of the available credit on your card. If you’re looking to buy a home soon, the ding your credit can take from carrying that wedding debt on a credit card could cost you when it’s time to apply for a mortgage.

Using a Personal Loan to Fund a Wedding

What are wedding loans? They’re exactly what they sound like. Essentially, a lender just offers you an unsecured personal loan to cover your wedding costs.

A personal loan will give you a broader range of options than a credit card when it comes to the term length on your loan, the amount you can borrow, and the interest rates offered. Interest rates on personal loans tend to be pretty reasonable, so they’re likely to be lower than rates on credit cards.

With a personal loan, you can choose how long you want your term length to be. If you need a few years to pay off the loan, your lender will probably be able to accommodate that. You can also choose a fixed interest rate, so that you lock in a manageable rate with the guarantee that it won’t shoot up later.

One of the benefits is that a personal loan can also help you build your credit. That’s not just because you won’t be using too much of your available credit, it’s also because you’ll be diversifying the type of credit you have. This could make it easier to get approved when you apply for a mortgage loan on your first love nest.

While swiping a credit card is an option that’s available immediately, you can get your personal loan disbursement fairly quickly. If you know you want to start making deposits on your wedding soon, you and your partner can apply for a personal loan today, and get the money you’ll need usually within a week.

SoFi Lending Corp. or an affiliate is licensed by the Department of Financial Protection and Innovation under the California Financing Law, license number 6054612.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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If you recently got a bonus or just sold off the antique nutcracker collection you inherited from your Uncle Leo, you might consider putting that extra cash toward paying off your loans or getting ahead on your mortgage. After all, one frequently given nugget of financial wisdom is to use unexpected windfalls to pay down your debt. But what happens when paying down your loans comes with a prepayment penalty?

Loan prepayment penalties are fees lenders might include in their terms to ensure you pay a certain amount of interest on your loan before paying it off. It might sound crazy, but making extra payments or paying your loan off early can actually cost you more because of loan prepayment penalties.

The best way to avoid prepayment fees, of course, is to choose a personal loan or mortgage loan without prepayment penalties. If you’re stuck with a prepayment penalty on your loan, however, all is not lost. There are ways to avoid paying loan prepayment penalties. Here’s what you need to know in order to avoid prepayment penalty fees:

What is a loan prepayment penalty?

A loan prepayment penalty is an extra fee that allows lenders to charge you a fee for paying off the loan before the end of the term. The term of your loan is the repayment time period that you and your lender agreed on when you applied for the loan.

Personal Loan Prepayment Penalties

For example, if you take out a $6,000 personal loan to turn your guest room into a pet portrait studio and agree to pay your lender back $150 per month for five years, the term of that loan is five years. Although your loan term says it can’t take you more than five years to pay it off, some lenders also require that you don’t pay it off in less than five years.

The lender makes money off the monthly interest you pay on your loan, and if you pay off your loan early, the lender doesn’t make as much money. Loan prepayment penalties allow the lender to recoup the money they lose when you pay your loan off early.

Mortgage Loan Prepayment Penalties

When it comes to mortgages, things get a little trickier. For loans that originated after 2014, there are restrictions on when a lender can use prepayment penalties, which has made the penalties less common on mortgages. If you took out a mortgage before 2014, however, your mortgage may be subject to loan prepayment penalties. If you’re not sure if your mortgage has a prepayment penalty, check your origination paperwork or call your lender.

How much are loan prepayment penalties?

The cost of the prepayment penalty can vary widely depending on whether you took out a small personal loan or a substantial mortgage, and how your lender calculates the penalty. Lenders have different ways to determine how much of a prepayment penalty to charge. It behooves you to figure out exactly what your prepayment fee will be, because it can help you determine whether the penalty will outweigh the benefits of paying your loan off early. Here’s how the penalty fee might be calculated:

1. Interest Costs. If your loan charges a prepayment penalty based on interest, the lender is basing the fee on the interest you would have paid over the total term. To take our example from above, if you have a $6,000 loan with a five-year term, and want to pay the loan off in full after only four years, the lender may try to charge you 12 months’ worth of interest as a penalty.

2. Percentage of balance. Some lenders use a percentage of the amount left on your loan to determine your penalty fee. This is a common way to calculate prepayment penalty fees on mortgages. For example, if you buy a house for $500,000 and want to pay off the remaining balance six months after purchase, your lender might require that you pay a percentage of your remaining balance as a penalty.

3. Flat fee. Some lenders also simply have a flat fee as a prepayment penalty. This means that no matter how early you pay your loan back, you’ll have to pay a previously-agreed-to penalty fee.

How can you avoid prepayment penalties?

Trying to avoid prepayment penalties can seem like an exercise in futility, but it is possible. The easiest way to avoid them is to take out a loan or mortgage without prepayment penalties. If that is not possible, you still have options.

First, you can stick to the loan terms you agreed to. It might feel like you’re letting the lender win by making monthly payments for the full term of your loan, but it ensures you avoid penalty fees.

You can also take a look at your loan origination paperwork to see if it allows for a partial payoff without penalty. If it does, you might be able to prepay on a portion of your loan each year, which allows you to get out of debt sooner without requiring you to pay a penalty fee. For example, some mortgages allow larger payments of up to 20% of the purchase price once a year—without charging a prepayment penalty. This means that while you might not be able to pay off the full mortgage, you could pay up to 20% of the purchase price each year without triggering a penalty.

Finally, some lenders shift their prepayment penalty terms over the life of your loan. This means that as you get closer to the end of your original loan term, you might face less harsh penalty fees, or no fees at all. If that’s the case, it might make sense to sit on Uncle Leo’s nutcracker fortune for a year or two until the prepayment penalties no longer apply.

If you’re looking for a loan or mortgage, remember that there are lenders like SoFi that don’t impose prepayment penalties. With no prepayment penalties, you can use an unexpected cash windfall to pay down your debt fast without worrying about fees.

SoFi Mortgages not available in all states. Products and terms may vary from those advertised on this site. See SoFi.com for details.
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