The maturity date for an installment loan like a personal loan is the date on which you should be finished paying off your loan, assuming all payments are made on time and in full. It’s important to mark this day on your calendar, not only so you can celebrate successfully paying back your debt, but also because it can tell you important information like how much you’ll ultimately end up paying in interest.
Here’s a look at how to figure out the maturity date for your personal loan, and other important loan terms you should know.
Table of Contents
Key Points
• The maturity date of a personal loan indicates when the borrower will have fully repaid the loan principal and any accrued interest.
• This date is specified in the loan agreement and is determined by the loan term, typically ranging from 12 to 60 months or longer.
• Borrowers can pay off their loans early to save on interest, but should check for any prepayment penalties that may apply.
• The maturity value of a loan includes both the principal and total interest paid, calculated using a specific formula.
• Timely payments ensure no obligations remain after the maturity date; otherwise, borrowers should contact their lender to discuss repayment options if needed.
What Is a Maturity Date On a Loan?
The term “maturity date” can be used with loans or investments. In investing, it refers to the day on which you’ll receive the money you invested, for example, in a savings bond or certificate of deposit (CD). You’ll get your investment back, plus any remaining interest that’s due to you.
If you’re a borrower, the maturity date of loans is the day a lender has scheduled for loaned funds and any interest to be paid off in full. Provided you’ve made regular and timely payments throughout the term of the loan, you’ll have no further obligation to the lender after the maturity date.
If, for whatever reason, you still have a balance after your loan maturity date, you’ll want to talk to your lender and work out a plan to pay off the remainder of your loan.
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How Does the Loan Maturity Date Work?
Your loan’s maturity date is a part of your initial loan agreement. So “What is a maturity date on a loan?” is not a question you should be asking midway through the loan process. You can find the maturity date on your loan contract. For example, say you take out a $10,000 personal loan on June 1, 2026 with a 36-month term. The loan maturity date will be 36 months later, on June 1, 2029.
It is possible to pay off your loan early before the loan maturity. This can save you money in interest payments. However, be mindful of whether your lender charges prepayment penalties. These penalties can outweigh the advantages of paying off your loan early.
Why Is the Loan Maturity Date Important?
The maturity date of a loan is its last major milestone. But choosing the personal loan term length that dictates the maturity date is an early step in the loan process. The maturity date is important because the length of time you have to pay off a loan, along with the loan amount and interest rate, are the things that determine your borrowing costs.
Length of a Personal Loan Maturity Date
The loan term is usually calculated in months. You can often find personal loans with terms from 12 to 60 months, and some lenders will offer loans with terms of up to seven years or longer.
The longer your term, the longer you’ll be paying interest, which generally makes longer-term loans more expensive for borrowers. When choosing a loan, you may want to consider one with the shortest term (and closest maturity date) possible, as long as you can comfortably afford the monthly payments.
Calculating Your Loan Maturity Value
A loan’s maturity value is the sum of what you’ve borrowed plus all of the interest you’ve paid (or will pay) on the loan. The maturity value (MV) formula is:
MV = P + I
Where “P” is the principal amount of the loan (the amount you borrowed) and “I” is the loan’s annual percentage rate (APR).
For example, say you take out a $10,000 personal loan with a 36-month term and 12% APR. In this case P = 10,000 and I = 12%. You would multiply $10,000 by .12 to arrive at the interest, or I — in this case: $1,957.15.
Then you would add the principal and interest to learn your maturity value, like this:
MV = $10,000 + $1,957.15
MV = $11,957.15
You can sidestep all the math by using a personal loan calculator to quickly compute the total costs of borrowing.
What Is an Amortization Schedule?
Your loan’s amount, term, and interest rate will be used to determine the amortization schedule that you may receive when you sign up for a personal loan. The schedule lists each loan payment’s total amount and how much of each payment is applied to interest vs. the loan principal. The amount you pay toward your loan each month will likely be fixed. But the portion of each payment that goes to principal vs. interest will change, with more of the payment going toward interest in the early months of the loan’s term.
If you refinance a personal loan, you’ll get a new maturity date, interest rate, and amortization schedule.
What Happens at the Personal Loan Maturity Date?
At the personal loan maturity date, you will make your final loan payment. Provided you have stayed on track with all of your payments, you will have fully paid off all of your loan principal and whatever interest you owe and have no further obligation to your lender.
If you think you’ll have trouble making any of your loan payments on time, it’s a good idea to reach out to your lender immediately and see if there’s anything it can do to help. The lender may allow you to pay at a later date.
Recommended: What Happens If You Default on a Personal Loan?
Other Key Loan Terms to Know
In addition to maturity and the principal amount, you’ll find other useful information on your personal loan agreement.
Loan Interest Rates
The interest rate is the amount that your lender charges you to borrow, and it’s the main way that lenders make money. Most personal loans rates are fixed interest rates, meaning the rate will not change over the life of the loan. The average personal loan interest rate is currently 11.40%. But rates will vary depending on your credit score.
Variable rate loans, on the other hand, carry interest rates that are usually pegged to a market interest rate. As a result, they can change over the life of the loan.
There may also be hybrid situations in which a loan starts with a fixed interest rate for a period of time, after which it switches to a variable rate. If market rates have gone down, this can be a good thing for borrowers. But if they’ve gone up, a variable-rate loan could be more expensive than its fixed-rate counterpart.
Recommended: What Is an Installment Loan and How Does It Work?
Monthly Loan Payments
You’ll be able to find the amount you owe each month on your personal loan agreement. Your loan payment should be the same over the course of your loan unless you have a variable interest rate.
Prepayment Penalties
If you’re wondering whether you can pay off a personal loan early, the answer is yes. Whether or not it makes sense to do so will depend on your loan agreement and the details of any prepayment penalties. Lenders may charge a fee based on the amount of interest you would have paid had you continued with regularly scheduled payment, or they may charge a flat fee or percentage of your remaining balance.
To avoid a prepayment penalty, read your loan agreement carefully before committing to a loan, as lenders handle prepayment differently. If you are midway through the life of the loan, it still pays to look at the loan agreement. Some lenders’ agreements allow a partial prepayment, which would reduce your interest costs. It’s possible the penalty will be less than the interest you would pay if you stuck with the payment schedule. Contact your lender to see if you can negotiate a reduced or waived penalty.
Paying off your loan early could hurt your credit score somewhat, as you will stop making regular payments on the loan and your credit utilization will change. However, if you can save money on interest by paying off the loan, it’s still a smart move to do so. Keep up the good financial habits that helped you pay the loan off early and your credit score should recover.
The Takeaway
For an installment loan like a personal loan, the maturity date of loan is the day of the final loan payment. This date is set based on the loan’s repayment period — how long you have to repay the loan, including both principal and interest. A personal loan is typically considered to have short- to medium-term maturity, since terms generally run from a few months to seven years.
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FAQ
What happens if the loan is not paid by the maturity date?
If your loan is not paid by the maturity date, you’ll need to work with your lender to come up with an extended repayment plan. If your last loan payment is late or your loan is in default, you may face penalties and your credit score may be negatively affected.
What is the maturity date on a loan?
The maturity date on a loan is the date by which a borrower has agreed to pay off the loan principal and interest in full. You generally make your final loan payment on the maturity date.
When is the maturity date on a loan?
The maturity date on a loan is the date when your final payment is due. It is based on the term of your loan. If you take out a personal loan on June 1, 2026 and the loan has a 36-month term, for example, the maturity date will be June 1, 2029.
Can you change the maturity date on a loan?
It may be possible to extend the maturity date on your loan through a process called loan modification. This is most often done in cases of financial hardship, when extending the date can help make payments more manageable. You could also consider refinancing the loan; though this is often done to obtain a lower interest rate, it could also allow you to make your loan term longer or shorter.
How does the loan maturity date affect my monthly payments?
The loan maturity date is the end point of your loan term, the number of months you have to repay what you have borrowed, with interest. The longer your loan term, the lower your monthly payments will typically be, but the more interest you will pay over the life of the loan. So a close-in maturity date usually means higher monthly payments and lower total interest.
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