FINANCE
Closing your loan early can backfire
Two costs are often overlooked by borrowers.
The prepayment penalty trap
Some lenders charge a fee that erases interest savings. But a second, invisible cost hits your credit.
The temporary credit score dip
Closing an account shortens your credit history's average age, which can cause a 5- to 15-point drop.
Calculate the net benefit
The full analysis weighs interest savings against hidden costs and impact on your credit profile.
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