A Complete Guide to Your Loan Repayment Options


With so many options to choose from, finding the right loan for your personal situation might seem daunting. Once you do find a loan that is the best fit for your personal situation, understanding the process of repaying those loans comes next.

Repayment options will look different for every borrower. Will the loans be interest-only? Will the loans come with a prepayment penalty? What repayment options will be made available to you?

These are all questions that new borrowers often have and our handy guide is here to answer all of them. Read on to find out more about available loan repayment options.

Different Loan Types

Your options for repayment will vary depending on the type of loan in question. Many different loan types exist to help you achieve various life goals that would otherwise be out of reach. Terms of borrowing and repaying will look different depending on the loan type.

A few examples of loan options that can help you achieve those life goals include:

  • Car loans
  • Personal loans
  • Student loans
  • Small business loans
  • Mortgage loans
  • Debt-consolidation loans

Lender terms will vary depending on the purpose, amount, and type of loan. Your lender will generally take into account a number of factors when it comes to creating your loan repayment plan such as your income and total debt amount in question.

Personal loans also take into account your credit score in order to determine the loan interest rate and monthly payment amounts. These types of loans also tend to have a fixed annual percentage rate. This allows customers to understand their monthly repayment terms upfront. The amount you owe on a fixed rate personal loan won’t vary month-to-month

Repayment Plan Overview

Let’s use student loans as an example as there are many student loan repayment options available to borrowers today. Repayment options can be categorized in one of two ways: income-based or standard.

For many, income-based repayment (IBR) plans are the norm with nearly 9 million borrowers enrolled in such a plan. With these plans, your monthly payment amounts are of course dependent on income. There are five options available underneath the IBR umbrella:

  • Revised pay as you earn
  • Income-sensitive
  • Income-contingent
  • Income-based
  • Pay as you earn

The key features for each of these plans differ slightly but each will be recalculated annually with the recertification of your income.

For student loans, the length of term will vary depending on when you first received disbursement of the loan. Many student loan repayment options vary from 15 to 25 years. Some plans will allow you to sign up for a longer repayment term so that your monthly payment amounts are less. 

Standard Student Loan Plans

For those who prefer more of a fixed payment amount and fixed term, standard repayment plans might just be right for you. Standard plans typically have a 10-year repayment term, which generally equates to borrowers paying less in interest over the life of the loan.

This option is great for borrowers who have the means to pay off their loans in the shortest amount of time. However, for any borrowers who want to take advantage of the Public Service Loan Forgiveness Program, standard loan repayment plans will not be the best fit.

Loan Forgiveness Programs

Multiple circumstances allow for borrowers to apply for loan forgiveness programs. The requirements for each program can be very specific but are open to federal student loans. Private loans will be ineligible.

Of the income-driven repayment plans outlined above, balances can be eligible for forgiveness after you’ve reached the 20 or 25-year mark. Additional loan forgiveness and cancellation programs include:

  • Public Service Loan Forgiveness
  • Teacher Loan Forgiveness
  • Perkins Loan Cancellation
  • Military assistance
  • Closed school discharge

Many scammers attempt to entice borrowers through immediate debt relief. However, keep in mind that loan forgiveness is only legitimate through the federal government.

Confirm with Your Lender

Once you’ve decided what type of loan best fits your situation, there are a few questions you’ll want to ask your lender before signing on any dotted lines. Knowing all of your repayment terms will help you feel better about any borrowing you undertake.

For any mortgage or personal lines of credit, confirm whether your loan will have fixed-rate or adjustable-rate loan payments. You’ll want to confirm what interest rates you’re approved for, as well as the annual percentage rate (APR) of the loan itself. Each of these will impact the length of time you will have to repay your loan.

A final item to keep in mind is to ask whether your loan comes with a prepayment penalty. Paying off loans early is an accomplishment, however, it can come with drawbacks if a prepay penalty is in place. Be sure to check with your lender if any prepay will be charged if you do happen to pay your loan off early.

Looking for Loan Repayment Options?

A good repayment plan can help alleviate the financial stress that tends to accompany large loan amounts. Maybe you prefer lower payments each month or perhaps you’d like some flexibility in the first years of your loan term.

Whatever your situation, there are multiple loan types and loan repayment options to fit your needs. If you’re currently seeking to apply for a loan or have questions about a current loan, Kingcash provides a great alternative to typical financial institutions.

We offer convenient lending solutions for you, all from the comfort of your home! Why not contact us today to get started? We’d love to help guide you safely on your financial journey.

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