Factors Affecting Your Personal Loan Repayments

Personal Loans and their repayments can be pretty confusing. If unplanned, repayment dues can cause additional financial damage to you. Here are some factors that affect your personal loan repayments and the necessary steps to take in each scenario. You can view personal loan repayment calculator to compute your loan requirements.

Credit Rating

Credit rating is the process by which a credit reporting agency determines your credit score by analysing your credit file. Credit score scales from zero to 1200, and your score determines your creditworthiness for opting for a personal loan.

When you make repayments for your personal loan or make dues, it is recorded in your credit score. Hence, the next time you apply for a personal loan, lenders may use your credit rating to determine your eligibility and interest rate.

You can increase your overall bank credit score by timely repayments or repaying amounts higher than your interest or early closure of personal loans.


CCR, or Comprehensive Credit Reporting, is the new credit reporting system in Australia. This replaced the old system, which focused on identifying negative behaviour in credit reports to determine your eligibility for a personal loan.

The new system (CCR) reports positive and negative credit behaviour allowing you to have a better chance at personal loan approvals. If you have a short credit history, switching to CCR will help you get a better credit rating. If you have a solid, healthy credit history, you can leverage that information through CCR in landing better offers.

Errors in Credit Report

Credit reports are usually error-free. But in instances where you observe an error, you should report the error and fix it immediately. Delay in fixing errors may damage your credit score and will affect your future personal loan applications.

You can report errors to the privacy commissioner and rectify them. In some instances, lenders make errors, and you will have to report the error and rectify them. You can identify and report errors by verifying your account and receipts/records of repayments of any loans in the respective account.

Financial Commitments

While applying for a personal loan, make sure that your interest payments are within your repayment capability. You should calculate your eligibility using an online tool. View a personal loan repayment calculator to assess your loan limit.

You may also check your other financial commitments such as credit cards, store cards, debit cards, mortgages, and so on. A thorough study will help you in the timely repayment of your personal loan.

Lumps Sum Repayments

A lump sum repayment is when you make a repayment that is above the monthly interest. The amount of interest is calculated on the remainder. This will help you reduce the principal amount and thereby reduce the interest amount for the same loan.

You will also have positive credit behaviour in your credit score to help you in future loan applications. Lump-sum repayments have no amount cap, and hence you can close your debt in one.

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