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Can you pay off your personal loan early?

Written byKoyo Loans
First published17th October 2022
  • Introduction
  • Can you pay off your personal loan early?
  • Can you freeze a personal loan?
  • Can I extend a personal loan?
  • Can I take a personal loan to buy a house?
  • Can you invest a personal loan?
  • Can you use a personal loan for business?
  • Can I transfer a personal loan to another person?
  • Can I use my husband’s income for a personal loan?
  • Can you get an unsecured personal loan?
  • Can I get a personal loan as a student?
  • Conclusion

In 30 seconds…

Personal loans are a flexible form of credit that you can use for various purposes. Depending on your lender, you might also be able to pay your loan off early without additional fees, and some may offer payment freezes and extensions. However, it’s important to read the terms and conditions of your loan carefully. Some lenders allow you to invest or transfer a personal loan, while others permit the use of personal loans for business. The key thing to remember is that all personal loans are different, so make sure you read the terms before signing the agreement.


Personal loans are widely available and are usually a suitable option for a variety of borrowers. That being said, there are still plenty of rules and conditions attached to how you can and can’t use personal loans.

With that in mind, borrowers need to be aware of these stipulations before submitting applications. To help you out, we explain in detail what personal loans can be used for, and answer a range of questions relating to the conditions associated with this type of loan.

Can you pay off your personal loan early?

The short answer is yes; you can pay off your personal loan early. However, you need to be mindful of early repayment charges (ERCs) and fees that you agreed to when you took the loan out. Early repayment fees vary from lender to lender and depend on how long you have left on your monthly repayment plan. It is important to obtain a settlement figure from the lender, so you know exactly what you need to pay and how that figure is broken down.

Koyo Loans doesn’t charge any additional fees, but there may be daily interest charges applied for a period of time, if you want to pay all or part of your loan back in advance of the agreed repayment schedule. What’s more, paying off your loan early isn’t complicated, and can be done at any time during the repayment process. For example, you can repay your Koyo personal loan early (once you have requested an Early Settlement Quotation), by logging into your account, where you have the option to make a bulk payment to settle part or all of your loan there and then.

If you have a loan with another lender, you must check the terms and conditions you agreed to when you took out the credit. You can always contact your lender directly if you can’t find the details of any ERCs that you will incur by repaying your personal loan early. You can then use this information to decide if it’s financially viable to repay your personal loan early.

Can you freeze a personal loan?

In many instances, it’s possible to freeze your personal loan repayments. Each lender uses its own criteria to decide if the interest on a loan is frozen, but if you’re struggling financially to meet the repayments, it’s worth contacting your lender to see what can be done.

Depending on the length of time you freeze your loan repayments, you’re unlikely to be charged any additional fees by your lender. However, you should be mindful that charges may accrue if you use a fee-paying debt management company to help you process your payments when you’re struggling financially.

The best way to freeze a personal loan is to reach out to your lender and explain your situation as truthfully and fully as you can. Most lenders are flexible when it comes to customers in financial difficulty. After all, FCA guidelines stipulate that lenders must consider freezing interest when a customer is struggling financially.

Can I extend a personal loan?

Many lenders offer you the option of extending your personal loan. However, in some instances, a lender will cancel your existing loan and take a new one out to match the new loan amount and schedule new repayment terms.

Ultimately, it depends on your reasons for wanting to extend your personal loan. Some borrowers seek to extend personal loans because they’re struggling to make the repayments, while others are looking to extend the loan term and amount to access more credit. Before considering any request, your lender will want to know your reasons for proposing the extension and will decide based on their terms and conditions.

However, most importantly, taking the necessary steps to avoid this situation before application is crucial. Always ensure you are in a suitable financial place to pay back your loan on time, as outlined before application.

Can I take a personal loan to buy a house?

Personal loans are not usually suitable for buying a home, but there are some exceptions. This is mainly because personal loans are often for comparatively small amounts – anywhere between £1,000 and £25,000 for unsecured loans (£1,500 and £15,000 with Koyo Loans) and up to £100,000 for secured loans.

In most instances, this isn’t enough to cover the cost of a house purchase, and a mortgage is a better option. However, if you’re looking to purchase a tiny house or a mobile home, you might be able to cover some costs with a personal loan. You’re required to explain your reasons for applying for a personal loan, so the lender can then decide whether or not to accept your application depending on your intended use of the money.

Some people consider using personal loans to cover the cost of a down payment on a house, but doing so increases your debt-to-income ratio and isn’t likely to stand you in good stead with mortgage lenders. So, while it’s possible to use a personal loan to purchase a house, it’s not the best option available to you and applying for a mortgage is your best bet.

Can you invest a personal loan?

Some lenders permit borrowers to invest a personal loan, but that doesn’t necessarily mean you should do it. Investments can go up or down, but you will always be required to make the stipulated repayments on your personal loan, even if your investment loses money.

Applying for a personal loan to invest only makes sense if you can leverage your good credit for low rates. If you can access a personal loan with a particularly low-interest rate, the interest charges that you pay back to the lender might be lower than your return on investment. Again, this is still a risky strategy and is not recommended.

If you do decide that investing a personal loan is a good idea for you, opting for a relatively low-risk investment strategy is a smart move. High-risk investment vehicles like crypto assets, mini-bonds, and structured products are best avoided if you are really planning to invest a personal loan, so make sure you do your research before deciding to invest money that you have borrowed.

Can you use a personal loan for business?

Some personal loans can be used for business purposes, but you will need to check the terms and conditions set out by your chosen lender. Lenders explicitly say what a personal loan can be used for, so it’s important to do your research if you plan on using the funds for business purposes.

Personal loans are among the most versatile forms of credit and can be used for a broad range of purposes. They’re also affordable and easy to apply for, making them a great option if you’re looking to fund some business expenses. Still, you need to read through the terms and conditions of any personal loan carefully, as you will need to ensure that the lender you’re applying to permits commercial use of the loan.

If you can’t find any information relating to the use of a personal loan for business purposes, ask the lender directly. It’s super important to be open and transparent about your intended use of any loan. If you deceive a lender in your application, they can legally ask you to pay the money back – plus interest – immediately, which is a situation you will want to avoid.

Can I transfer a personal loan to another person?

In most instances, personal loans can’t be transferred to another person because they are determined based on your personal credit score. However, other types of loans, including car loans and mortgages, are transferrable.

Although borrowers aren’t usually permitted to transfer the responsibility of a personal loan, another person can become responsible for paying the remaining balance of your loan. If you’re struggling to meet the repayments on a personal loan, it’s helpful to consult a friend or family member to see if they can assist you. For instance, they could transfer the required money into your account every month to help you make the repayments on time. It is always a good idea to speak to your lender if you are having trouble with repayments.

Failing to pay back a personal loan will lead to your credit score taking a major hit, and a debt collection agency may even get involved. It’s for this reason that it’s so important to consider the affordability of a loan before taking it out. You might also approach a family member to act as a guarantor on your personal loan, which is a viable option for people with poor credit scores.

Can I use my husband’s income for a personal loan?

If you apply for a joint personal loan with your partner, then you can use their income on your loan application. However, if you’re applying for the loan singularly and have no intention of including your partner on the application, you can’t use their income in an attempt to access more credit or lower rates.

Another option is to include your partner as a guarantor on your loan if you don’t want to make a joint application. This can help you access higher credit amounts and lower rates, particularly if your partner earns a high wage and has a good credit history. Of course, you will also need to consult your partner and ask if they are willing to jointly apply for a personal loan or act as your guarantor.

We say this because couples manage their money in many different ways. Some combine everything, while others maintain their financial independence. With that in mind, you need to be on the same page as your partner and consider whether it’s viable to jointly apply for a personal loan or whether you would like to include them on your application as a guarantor.

Can you get an unsecured personal loan?

Unsecured personal loans are a potential option if you’re looking to borrow anywhere between £1,000 and £20,000. They’re easy to apply for, widely available, and relatively low risk when compared to secured personal loans.

One of the benefits of unsecured personal loans is that they’re not secured against any of your assets. In other words, you don’t need to put your home or another high-value asset at risk when you’re borrowing money. Still, you need to make sure you can afford the repayments on an unsecured loan, as your credit score will take a huge hit if you default.

At Koyo Loans, we provide unsecured personal loans between £1,500 and £15,000, 24.9% APR Representative. Our unsecured loans are fast and simple to apply for, making them a good option if you’re looking for a loan within days.

Can I get a personal loan as a student?

Provided you’re over the age of eighteen, you can apply for a personal loan as a student. However, it’s often difficult to access credit when you don’t have a credit file with one of the UK-based credit bureaus, meaning students often struggle to acquire a personal loan.

Another thing to be mindful of is that most lenders require borrowers to be in full-time employment – or at least to have a steady source of income – which makes it even more difficult for students to access personal loans. Students are more likely to succeed with an application if they have someone act as their guarantor on a personal loan, whether it’s a friend or a family member.

Although personal loans are often difficult for students to come by, there are other options to consider. Applying for a student loan is your best option, while some banks offer credit cards to students, albeit with tight limits. Another option is to look for a part-time job when you’re a student, which is an effective way to help you meet some of your living costs when you’re completing your studies, instead of taking out a loan.


Understanding the terms and conditions attached to personal loans is incredibly important if you’re hoping to access this form of a loan. At Koyo Loans, we provide unsecured personal loans between £1,500 and £15,000, which you can then use for a range of purposes. 24.9% APR Representative. Get started with our loan calculator to see how much you can borrow today.

Koyo Loans is the trading name of BETR Technology Ltd. Company No. 11483187. Registered Office: Huckletree Soho, Ingestre Court, Ingestre Place, London, W1f 0JL

Key Takeaways

As personal loans are flexible, you have a fair amount of leeway with them. For instance, many personal loans can be repaid early without fees, frozen for a specific period of time, extended, invested, transferred, and even used for business purposes. This means you can adapt your loan to suit your financial circumstances by reaching out to the lender and making a request.

Every personal loan is different, and every lender presents its own terms and conditions. Therefore, you need to read the small print before applying for a personal loan so you know precisely what you’re signing up for. Whether you’re applying for a personal loan as a student or to fund a house purchase, you need to be aware of the terms presented by the lender.

Ultimately, unsecured personal loans are usually available for relatively small amounts of credit – up to £25,000 – and can be used for a range of purposes. The fact that they’re so flexible is also a huge draw for borrowers, making them a viable alternative to some other forms of credit.

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