@Anonymous wrote:Monthly payment would be smaller.
Monthly payment never changes on a fixed payment loan, which I think all personal loans are. LOC's are the ones with variable payment structures.
What will happen functionally is just like a regular payment on any simple interest loan: it will zero out the interest, and then the rest is applied to principal.
Where it gets confusing and is lender by lender basis, they can do one of three things:
1) Not change the next payment date (or to be precise, only count it for the next payment)
2) Push the payment date a fixed period of time (DCU for example, 3 months).
3) Push the payment date far into the future (like my Alliant loan next payment 12/2018) applying the large payment to successful regular payments. Most lenders I believe do this but there are exceptions.
I don't know on Avant in particular, OP in your situation if you made the payment see what you get. If it doesn't push the date out, just pay it off and open up a $500 secured loan with Alliant, pay it down to $20 or whatever, and then let it hang out making a $1 payment or whatever every six months.
@takeshi: I don't agree with you on this one 
. Someone who doesn't have an open installment loan can tack on an extra 20-45 points to their FICO 8 scores just by doing this, for less money than it takes to check a credit score. Absolutely worthwhile investment.
@Revelate wrote:
@Anonymous wrote:Monthly payment would be smaller.
Monthly payment never changes on a fixed payment loan, which I think all personal loans are. LOC's are the ones with variable payment structures.
What will happen functionally is just like a regular payment on any simple interest loan: it will zero out the interest, and then the rest is applied to principal.
Where it gets confusing and is lender by lender basis, they can do one of three things:
1) Not change the next payment date (or to be precise, only count it for the next payment)
2) Push the payment date a fixed period of time (DCU for example, 3 months).
3) Push the payment date far into the future (like my Alliant loan next payment 12/2018) applying the large payment to successful regular payments. Most lenders I believe do this but there are exceptions.
I don't know on Avant in particular, OP in your situation if you made the payment see what you get. If it doesn't push the date out, just pay it off and open up a $500 secured loan with Alliant, pay it down to $20 or whatever, and then let it hang out making a $1 payment or whatever every six months.
@takeshi: I don't agree with you on this one
+1
Couldn't agree more and "CAN" prove beneficial for your profile going forward.
Some useful FACTS and heavy discussion:
Are you on an auto payment scheme? If so and you pay off $1500 your term could be much shorter.
I got a loan from NFCU in January. I don't have auto pay. I have paid off 80% of the loan which has a 1 year term. My next payment is due in November. I will make tiny monthly payments until next January.
I would check your loan contract to see your payment schedule. If need be call Avant and talk to a representitive.
I think a loan like this can be helpful net only for scoring but also to develop a relationship with a bank or CU.
@RobertEG wrote:You would reach $0 principal balance quicker, and thus the term would shorten.
Not by much depending on how the lender implements their system; for example prepaying a 5 year loan down by 95% from the start, if they move the payment due date way out in the future, you only lose a few months off your original term.
If you decide to keep paying your regular payment, then yes term would reduce, but it's not mandatory and I would argue and it's really not in one's best FICO interest, and when we're talking small principal left on a much larger loan, and even smaller interest on that, the financial penalty becomes sort of trivial for pretty much everyone when it the cost is giving up one Starbucks coffee a year or thereabouts, and maybe less.