Yes, you can pay off your personal loan early. However, a better question to ask is whether you should do so, and whether your specific lender will penalise you for it.
While paying off debt early is almost always a good idea to save on interest, there is much more to consider.
What if your lender charges a massive exit fee? What could that extra cash flow do to your overall budget?
In this article, we will explore these questions and walk you through how to calculate the difference between paying your cash loan off early and staying the course, so you can decide what is best for your finances.
Do All Cash Loans Have Early Repayment Fees?
No, not all of them do, but it is common in the short-term lending market within the categories that allow it.
A lender cannot charge an exit fee on a Small Amount Credit Contract (SACC), whereas you can for a Medium Amount Credit Contract (MACC).
This is largely due to the fact that SACC loans charge a flat 4% monthly fee based on the original loan amount, rather than an interest rate applied to the outstanding balance.
So their revenue is pegged at a higher rate for as long as the loan is outstanding.
Because of this difference in pricing structure, many MACC lenders include an early repayment fee or break cost in their loan agreements.
However, at Gusto Cash, we do not charge any fees for early repayment.
We believe that if you have the funds to get out of debt sooner, you should be rewarded, not penalised.
If you already have a Medium Amount Credit Contract (MACC) with another lender, you will need to check your contract closely.
An unexpected early exit fee could exceed the money you save by staying the course with your repayment schedule.
Why Do Other Lenders Charge Early Repayment Fees?
Lenders price their loans based on the full term of the agreement.
Because MACC personal loans calculate interest on a reducing balance, if you repay the loan early, you will save a lot of money in interest.
This also means the lender makes less revenue to cover their own internal costs.
The early repayment fee is a mechanism used to recoup some of that lost future income, as well as to cover the administrative cost of closing down the loan early.
How to Check Your Early Repayment Fee
All fees associated with a loan must be legally included in your original loan agreement.
Assuming you have saved a copy, simply open the document and find the fee schedule.
If you do not have a copy, call your lender and ask them for a formal payout quote.
This quote will detail your remaining principal balance, any accrued interest, and any early exit fees attached to closing the account today.
When Does an Early Payout Save on Interest?
Usually, you should only pay off your personal loan sooner if the interest savings outweigh the cost of any early exit fees.
Unless you are with Gusto Cash of course, where you save 100% of the remaining interest!
Because interest is calculated on what you currently owe, your savings will be much larger if you pay out your loan early in the term rather than waiting until the final few weeks.
Case Study
Let’s look at how your savings evolve over the course of a standard MACC loan term if you’re with a lender that does charge a fee.
Loan Scenario: A $4,000 MACC loan at a 48% p.a. interest rate, repayable over 2 years (24 months).
If you pay this off normally, your total interest cost over two years is roughly $2,250.
Let’s see what happens if you decide to pay the loan off early, assuming the lender charges a flat $150 exit fee.
| Remaining Term | Future Interest Saved | Competitor Exit Fee | Net Savings |
| 18 Months Left | $1,550 | $150 | $1,400 |
| 12 Months Left | $850 | $150 | $700 |
| 6 Months Left | $250 | $150 | $100 |
| 1 Month Left | $15 | $150 | -$135 (You lose money!) |
As you can see, for the vast majority of the loan, the net savings of paying your loan early vastly outweigh the penalty fee.
However, if you only have one or two months left, the competitor’s fee is actually higher than the interest you will save.
(Note: If this was a Gusto Cash loan, the exit fee column would be $0, meaning your Net Savings would match the Future Interest Saved exactly at every stage!)
Benefits of Paying Out a Personal Loan Early
1. Save Money on Your Loan
The less time you spend paying interest, the more money stays in your pocket.
Even making small additional repayments each week can significantly reduce the total interest paid over the life of the loan depending on the full repayment term.
2. Free Up Cash Flow
If you are planning to apply for finance elsewhere (like a car loan or a mortgage), removing a regular personal loan payment from your budget can improve your borrowing power.
Lenders look at your uncommitted monthly income, and wiping out a debt frees up your cash flow instantly.
3. Improve Your Credit Score
Your credit score is a reflection of your past behaviour in managing credit.
Under Comprehensive Credit Reporting, a lender can see if your loans have been reliably repaid and successfully closed.
Demonstrating that you can responsibly manage and pay off an unsecured cash loan makes you look highly financially responsible to future lenders.
4. Be Debt-Free Sooner
Being debt free also comes with a certain peace of mind from not having loan repayments coming out on payday.
Know Your Numbers Before Paying Off Your Loan
You can absolutely pay off your cash loan early, and often, the benefits heavily outweigh the costs.
Getting out of debt sooner is a fantastic financial milestone.
Just remember to check your contract, calculate your early repayment costs with your current lender, and compare them to the interest you will save over the remaining term.
If you are looking for a transparent, flexible MACC personal loan and don’t want to be penalised for getting ahead on your payments, the team at Gusto Cash is here to help.
No exit fees, no early repayment penalties, just fair assessments and fast cash.
