How 2 international students paid off their loans faster

Want to repay your international student loan early? Want to do it without penalties?

It’s totally possible. It all depends, of course, on your loan provider - and, to some extent, where you live. 

How can you pay off your student loan earlier?

Are penalty-free prepayments the norm where you live?

In some countries, like Pranay’s home country of India, you’ll find there are usually penalties attached to early loan repayment. And, often, those penalties are steep enough to stop you from considering that.

In other countries, like Colombia where Maria comes from, there are laws in place to prevent banks and other lenders from charging prepayment penalties: if you accept a loan, you can repay it as quick as you like.

Why should you think about paying your loan off sooner?

Why would Pranay and Maria want to repay their international student loans earlier? There are a couple of reasons (or, depending on how fast you can repay your loan, several thousand reasons):

1. You’ll pay less on your student loan overall. The faster you pay, the less interest accumulates, so you pay less over the life of your loan.
   
   
2. You can minimise additional international student loan costs. If you repay a student loan issued in the currency of your host country while still living and working there, you’re cutting out some of those FX and exchange rate risks. 

When should you start paying if you want to repay your loan sooner?

1. If you’re like Pranay, you’ll start making payments as soon as you can. And that means well before your grace period expires.
   
   
2. If you’re like Maria, you’ll begin as soon as you get that signing bonus and start earning with your new career. 

What will my loan look like if I pay early?

We can’t speak for other lenders, but if you accept an international student loan with Prodigy Finance, beginning payments early or paying more than the minimum cuts the total amount you’ll pay on your loan.

In both cases, you’ll be paying more than the minimum owed by a specific date. That reduces the amount of interest that accumulates on your loan and means your money will start hitting the principal balance of your loan faster (which subsequently reduces your interest).

But, you’ve still got options:

• If you need to tighten your finances in the future, you can go back to paying the minimum due every month for the duration of your loan repayment cycle. Because you’ve paid more already, your monthly minimum due will be recalculated and you’ll need to pay less.

• If financial freedom is your goal, then you can keep paying more than the minimum (which will be less every month thanks to that recalculation) until you’ve paid off your loan in full. 

For many international students and graduates, early loan repayments are just part of the plan. 

Whether it’s a matter of ensuring the loan is paid while living and working in your host country (before visa authorisation runs out) as is the case of Pranay, or simply because it penalty-free prepayments saves money off the total cost of your loan, it’s something to consider when accepting any international student loan.