Paying off your personal loan early can be a powerful step toward financial freedom—especially when your lender supports your goals instead of penalizing them. If you’ve got the funds to pay off your loan ahead of schedule, make sure you understand your loan terms and financial circumstances to determine whether it’s the best idea. Here’s what to consider.

Key TAKEAWAYs

BHG Financial allows full or partial early loan repayments on personal loans secured through our banking partner with no prepayment penalties, helping you save on interest and reach debt-free goals faster.
Not all lenders allow for this type of repayment flexibility. Choosing a lender with a flexible repayment policy for personal loans gives you the chance to capitalize on cost-saving opportunities as your budget allows.
Before you pay off your loan, ensure you maintain a healthy emergency reserve and consider the opportunity cost of using your available cash.

Can I pay off a BHG Financial personal loan early?

Yes—BHG Financial gives borrowers the flexibility to pay off personal loans secured through our banking partner early, with no fees or restrictions. Whether you want to pay off the full balance or make extra principal payments over time, you’re free to do so.

A prepayment penalty is a fee some lenders charge if you pay off your personal loan before the term ends. BHG does not impose these penalties. This flexibility is ideal if you have extra breathing room in your budget, sell an asset, or simply want to reduce long-term interest costs.

Question	BHG answer
Can I pay off a BHG personal loan early?	Yes
Is there a prepayment penalty?	No
Are partial payments allowed?	Yes

“The right consumer loan offers short-term flexibility, helps borrowers regain control of their finances, and empowers them to feel confident in the choices they make on their path toward financial freedom," says Zach Raus, president of loan sales and services at BHG Financial.

“With true prepayment flexibility, consumers can pay down their balances faster and manage their interest expense on their own terms, without penalty or added cost. BHG's flexible solutions help customers secure financing that works for them—not against them.”

How BHG handles prepayment penalties and fees

Transparency is central to BHG’s lending approach, and our structure is clear: no prepayment penalties on personal loans secured through our banking partner. The only upfront cost is an origination fee, typically 3% to 5% of the loan amount, which is deducted at funding. This fee does not affect your ability to pay off your loan early.

Fee type	Applies?	Typical range
Prepayment penalty	No	N/A
Origination fee	Yes	3%–5%
Early payoff processing	No	N/A
Administrative fees	Check agreement	Varies

FYI: There are several smart ways to accelerate your loan payoff. You can make biweekly payments instead of monthly ones or apply extra funds directly to your principal and reduce your balance. Even small, consistent extra payments can shave months off your term and save thousands in interest over time.

Step-by-step guide to paying off your BHG loan early

Paying off your personal loan early is pretty straightforward with BHG. Following these steps ensures your account is closed correctly.

1. Contact BHG for your official payoff amount

Start by requesting your official payoff amount from BHG’s customer service team. This amount differs from your current principal balance because it includes accrued daily interest (known as per diem interest).

2. Review your payoff letter carefully

Your payoff letter outlines the exact amount due, payment deadline, and accepted payment methods. Review these details carefully to prevent miscalculations that could result in additional interest charges.

3. Submit payment according to instructions

Pay by the method specified and ensure funds arrive by the deadline to avoid additional per diem interest.

4. Confirm loan closure and cancel automatic payments

After submitting payment, verify that your account shows a zero balance. If you’ve set up automatic payments, confirm they’ve been canceled to prevent future withdrawals. BHG’s customer service team can provide written confirmation that your loan is officially closed. Our U.S.-based concierge customer service team is available to answer questions and guide you through payoff and account closure.

Benefits of early personal loan payoff with BHG Financial

Securing a loan (and a lender) with prepayment flexibility can offer measurable financial advantages. If you decide that paying off a loan ahead of schedule is in your best interest, here are some ways it can help improve your standing.

Decreases the total interest you pay over the life of the loan. A borrower with a $50,000 loan at 12% interest over seven years would pay more than $24,000 in total interest. Paying it off two years early could save over $5,000 in interest alone.
Reducing your outstanding debt improves your DTI—a key factor lenders consider when assessing new credit applications. A stronger DTI can enhance your eligibility for future financing, such as mortgages or business loans.
Creates both mental and financial breathing room by eliminating debt. Without the obligation of a monthly payment, you can better weather unexpected expenses—like a slow business quarter or a large home repair—without disrupting your budget. This stability can reduce stress and make it easier to make more confident money moves.

Important considerations before paying off your loan early

While paying off your loan early offers clear advantages, it’s worth pausing to evaluate how this decision fits into your overall financial strategy.

1. Review your personal loan agreement

Confirm there are no administrative or processing fees associated with your payoff. Although BHG does not charge these, your specific agreement will outline any rare exceptions.

2. Evaluate opportunity cost

If your loan has a competitive fixed rate, consider whether the money you’d use to pay off your loan early could earn more elsewhere—for example, through investments or retirement contributions. If the after-tax return from those investments exceeds your loan rate, it may be wiser to keep the loan and let your capital grow.

3. Maintain emergency savings

Financial experts often recommend keeping three to six months of expenses in liquid savings. Avoid depleting your emergency fund solely to pay off debt. A strong cash reserve ensures you remain prepared for unexpected expenses.

How early payoff may impact your credit profile

Paying off a loan early affects your credit score in several ways. In the short term, your score may dip slightly because closing an active installment account (like a personal loan) can reduce your credit mix and/or shorten your average account age.

The extent to which your score changes will depend on your overall credit profile. If you have a short credit history and a limited credit mix, keeping the loan to its full term may be more beneficial for building your score.

For most borrowers, the long-term impact is almost always positive. Early payoff lowers your overall debt load and improves your debt-to-income ratio, which enhances your ability to qualify for future credit.

BHG reports paid-off loans in good standing to the three major credit bureaus, meaning your positive payment history remains on your report for up to 10 years. This helps strengthen your credit profile over time.

Additionally, if you use the extra cash flow to pay down revolving credit balances, your credit utilization ratio will drop—a key driver of credit score improvement.

The bottom line

Paying off your BHG personal loan early is an empowering move that can save money, reduce stress, and improve your overall financial standing—without the fees lenders may impose. Compare lenders carefully to find a loan that provides the flexibility to pay it off sooner, so you can make the best decision for you.

Whether you make extra payments over time or pay your balance in full, you’ll benefit from BHG’s transparent, penalty-free structure designed to support your financial growth.

BHG loan early payoff FAQs

How can I pay off my loan faster?

To pay down your personal loan faster, you can make biweekly payments instead of monthly ones or apply extra funds directly to your principal to reduce your balance when you receive bonuses, tax refunds, or commission payments. Even rounding up your payments a little bit each cycle can shave months off your term and save thousands in interest over time.

Does BHG charge a prepayment penalty if I pay off my personal loan early?

No, BHG does not charge prepayment penalties on personal loans secured through our banking partner, so you can repay early without extra fees if you decide it’s in your best interest to do so.

How do I pay off my BHG personal loan early?

Request a document detailing your official payoff amount from BHG, follow the payoff letter’s payment instructions, submit payment by the deadline, and confirm account closure.

Will I save money by paying off my BHG loan early?

Yes—early payoff reduces total interest paid; the exact savings depend on your balance, rate, and remaining term.

How do I make sure my extra payments go toward the principal?

Contact BHG Financial’s client services to specify that additional funds should be applied to the principal and follow their instructions for making extra payments.

Will paying off my BHG loan early affect my credit score?

It may cause a small, temporary score dip due to account closure or changes in credit mix. However, early payoffs generally benefit your long-term credit health.

Can I make partial extra payments, or must I pay off the loan in full?

You may make partial extra payments at any time with no penalty; these reduce principal and future interest.

How do I get a payoff letter or statement from BHG?

Contact BHG client services by phone or your online portal to request a payoff statement with per diem interest and payment instructions.

Are there any fees for early payoff besides a possible prepayment penalty?

No—aside from the origination fee paid at loan inception, BHG does not charge early-payoff fees; always review your loan agreement to confirm.

What happens to my automatic payments after early payoff?

BHG will cancel automatic payments once the personal loan is paid in full; confirm cancellation with customer service.

Does BHG report the early payoff to credit bureaus?

Yes—BHG reports the loan as closed in good standing to major credit bureaus, preserving your payment history on your credit report.

Not all solutions, loan amounts, rates or terms are available in all states. 

Consumer loans funded by Pinnacle Bank, a Tennessee bank or County Bank. Equal Housing Lenders.

For California Residents: BHG Financial loans made or arranged pursuant to California Financing Law license - Number 603G493.