Paying Your Cash Loan Off Early
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Got a cash loan on your hands? No stress! At Quick Loans, we’re all about turning what might seem like a financial pickle into a savvy opportunity. Paying off your cash loan early isn’t just a smart move; it’s a game-changer. It’s like finding a shortcut on your daily commute – saving you time and, more importantly, money. Let’s dive into how you can tackle that cash loan head-on and come out on top, with more cash in your pocket and a spring in your step towards financial freedom.
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.
Perks of Paying Off Your Loan Early
- Slash That Interest: Why let interest pile up? Knock out that cash loan early and watch the savings roll in. It’s like finding money in your pocket!
- Credit Score? Up It Goes!: Paying off early isn’t just smart; it’s a credit score booster. Show those lenders you’re the boss of your finances.
- Wave Goodbye to Money Worries: Imagine life without that loan hanging over your head. Pay it off early and breathe easy. It’s like a financial sigh of relief!
- More Cash in Your Pocket: Once that loan’s gone, your wallet gets fuller. That’s more dosh for you to play with or stash away for a rainy day.
- Investment Doors Swing Open: No more loan repayments? Time to think bigger. Savings, investments, the world’s your financial oyster.
- Dodge the Debt Spiral: Get out of debt’s way fast. Paying off early means you’re not stuck in that endless loop of owing.
- Budgeting Like a Pro: Paying off a loan early takes some savvy budgeting. Master that, and you’re on your way to financial wizardry.
- Next Goal? Bring It On!: With one loan down, what’s next? A holiday, a new car, saving for a house? You’re ready for the next big thing.
- Missed Payments? Not You!: Pay off early and the risk of missing a payment drops to zero. It’s playing it safe with your finances.
- That Debt-Free Feeling: There’s nothing quite like the buzz of being debt-free. It’s a pat on the back from you, to you. Go on, celebrate a little!
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.
Things to think about:
- Financial Flexibility: Ensure you can manage larger payments without straining your budget. Early repayment is beneficial if it doesn’t compromise your financial stability.
- Savings vs. Credit Score: Balance the interest savings against the potential benefits of a longer credit history. Consider which aspect aligns more with your financial goals.
- Emergency Fund Check: Make sure you have a solid emergency fund. Avoid depleting it for loan repayment, as it’s crucial for unforeseen expenses.
- Loan Terms Review: Examine any early repayment fees or penalties. These could influence whether paying off early is financially sensible.
- Personal Peace of Mind: Sometimes, the mental relief of being debt-free outweighs strict financial logic. If paying off early reduces stress, it might be the right choice for you.
More Information
If you want to talk to us about applying for a loan please call Quick Loans on 0800 200 275 or simply apply online.
Quick Loans can help you with personal loans, cash loans, debt consolidation, and car loans.
This is not legal advice.
by Ash Horton
27/11/2020
Ash is a professional content writer with extensive experience in business development in the financial services. Ash has founded businesses from the age of 19, including franchising ventures, and working alongside some of the largest retailers in the world.