It makes sense in economic terms to pay off your loan before the end of its term, however, please beware. The unsecured loan may contain charges within the agreement relating to the early repayment of the balance. Just to add to any confusion, different providers have varied terms for this. Here are a few of the more common terms so you can keep your eyes out for them:

• Early repayment penalty
• Early redemption fee
• Redemption charge
• Early settlement fee

It's true that there is no set in stone amount for the early repayment penalty, however, this is usually 1 or 2 months interest.

Before you sign for a loan consider whether you will wish to repay the loan early. If you intend to let the loan run its full term then there is nothing further to consider.

Should you have a plan to repay the loan early it is important that you source a product with the lowest early repayment charges, even if this means the initial APR is slightly higher.

It's also important to remember that if you take out a new debt consolidation loan you will still have to pay the early repayment charge on your current loan(s).

So, before you start to look for the most suitable loan consider the following:

• The APR (Annual Percentage Rate)
• Monthly repayments
• Any early repayment penalties

Not all unsecured loans have an early settlement charge so you could find getting the best loan rate, lowest monthly cost and no early repayment penalty is possible.

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