Cash loans can be a necessity when looking for a quick financial solution, however, it is important to consider that the loan will need to be repaid over a set term. If your cash loan allows for an early payoff without an extra fee, you’ll have the opportunity to save money on interest allowing you to free up your funds for other expenses sooner. Here at Quick Loans we are nice and we do not charge an early payment fee and you will also save interest if you pay it faster or in a lump sum.
Why should I pay off my cash loan early?
Depending on your cash loan’s interest rate, having a longer loan term will result in having to repay more in interest. If you’re able to pay your cash loan off before the term ends, you can actually save money by not having to pay as much interest. The bottom line is that paying off your cash loan early will usually save you money in interest and decrease the overall term of the loan.
How to pay off a cash loan early
Round up your payments
One way to pay off your cash loan faster is by rounding up your payments. Instead of just paying the recommended amount, consider rounding your payment up to the nearest $50. This strategy could potentially save you hundreds of dollars in interest.
If $5,000 was borrowed at a 12.95% interest rate over 24 months, your monthly payment would be $271.64. Your cash loan would be repaid in 24 months having paid $759.31 in interest.
Simply by rounding up payments to $300 a month, your cash loan would be repaid in 22 months, having paid only $647.77 in interest — that’s a saving $111.54.
Don’t skip payments
It can be tempting to skip a cash loan payment or two when given the ability too. Resist the temptation. Be aware that skipping payments will lengthen the term of your loan and cost you more in interest.
Make additional payments
Have you acquired some extra money? Put it towards your cash loan – this is another easy way to have it paid off faster. Use your tax refund, bonus, or pay rise to make extra payments. You will be tempted to put this money towards your wants but this less glamorous scenario it is the most financially responsible as it will save you in interest costs.
Reduce your expenses
If the idea of reducing your bills appeals to you, think about what extra expenses you could temporarily cut out of your life. Maybe you could ditch subscription TV? You could also reduce your expenditure on dining out, entertainment or shopping budgets. If you look closely, you’ll find an area in your budget to cut down on expenses, and this newly freed up cash can go towards paying off your cash loan faster.
What will my savings be with early repayment?
The savings will vary and depend upon the loan size, the interest rate, and loan term. It’s important to keep in mind that if you have a small loan balance remaining and a low-interest rate – then you probably won’t save much. However, if you have a large loan balance and a high-interest rate and repay your cash loan well before the expiration of the loan term, then you may save thousands. Some cash loans may come with an early repayment fee so ensure you are aware of any additional fees or charges. Quick Loans do not charge any fees for an early repayment, which means you will save money on interest if you can pay off your cash loan early.
Is early repayment right for me?
Even though it may seem like paying your cash loan off early could be a great way to save money, you might find it doesn’t make sense for your situation. If you choose to continue repaying the balance on your cash loan, keeping the account open for the loan’s full term will show lenders that you can make your payments in full and on time, potentially resulting in an increased credit score. When applying for future cash loans, you should have the ability to qualify for better loan terms with your increased credit score.
If you want to talk to us about applying for a loan please call Quick Loans on 0800 200 275 or simply apply online.
This is not legal advice.