Should I Pay Off My Loan Early?
If you take out a loan, you may decide to pay it off early, especially if you have some extra cash on hand. You can pay off your loan weeks, months, or even years before its term comes to an end. Here are some pros and cons to consider before you decide whether to pay off your loan early.
Pros of paying off a loan early
The most noteworthy advantages of paying off a loan early include:
You can save money
When you pay off a loan early, you can save money on interest fees. Depending on your interest rate and loan amount, this may be hundreds or even thousands of dollars. You can then use this extra money to meet other financial goals.
You can improve financial health
Paying off a loan early leads to less debt. The less debt you have, the better your financial situation will be. You’ll have more money for savings, investments, and the things that make you happy.
You’ll have peace of mind
If you pay off a loan early, you won’t have to worry about the monthly payments. In the event that you lose your job or face another unexpected financial hardship, this can alleviate a lot of stress.
Cons of paying off a loan early
The drawbacks of paying off a loan early are:
You may face penalty fees
Some lenders charge prepayment penalties for paying off a loan early. A prepayment penalty may be a percentage of the loan balance or a flat fee. Fortunately, many lenders offer loans without prepayment penalties. Advance America does not charge a penalty for paying off early.
You might hurt your credit
If you’re trying to build or improve your credit history, paying off a loan early may temporarily hurt it. This is particularly true if it was your only loan or you paid off your lowest balance account.
You’ll have less money for other expenses
Using your money toward an early loan payoff can reduce the amount of cash you have at your disposal. Consider if paying off the loan early will impact the money needed for other necessities like rent or mortgage, or utilities before making this decision.
Should I pay off my loan early?
To decide whether it’s a good idea to pay off your loan early, you should weigh the pros and cons and consider the loan terms. If you want to save money in the long run and improve your financial health, then paying off your loan early could be a good idea. But if you don’t want to deal with extra fees or having your credit score go down, you may want to wait to pay off your loan. Consider your unique financial situation and what’s important to you when making your decision.
You can pay off Advance America loans early
Advance America offers a variety of loans you can pay off early without any pre-payment penalties, including payday loans, installment loans, title loans, and lines of credit. You may apply online or in-store and receive your funds in as little as 24 hours. Better yet, you don’t need good credit to get approved. Visit Advance America today to learn more about the loans we offer.