man wondering can pay off loan early

Can You Pay Off A Loan Early?

There are many situations in life where you just need a loan to bridge a gap in your budget. Loans can help you get through a tough financial time, but they do have to be paid off eventually. Generally speaking, paying back a loan occurs on an agreed-upon date with your lender, and often in installments.

But what if you have the ability to pay it off early? After all, most people would prefer to pay back their loan as quickly as possible, and it may seem pointless to only pay a loan on certain dates if you have the means to pay it off early. But are you actually allowed to do this?

Most Loans Can Be Paid Off Early

The good news is, more often than not you have the option to pay off a loan early. Even installment loans, which are typically defined by a fixed repayment schedule, are usually allowed to move up the payment dates. In fact, all of the following loans can be paid off early:

  • Personal Loans
  • Student Loans
  • Car Loans
  • Debt Consolidation Loans
  • Credit-Builder Loans
  • Home Equity Loans
  • Mortgages

With these loans, a lender will usually allow you to pay off a loan early. However, this is not a given. Every loan is subject to the agreement you sign with the lender. Some lenders may have restrictions on when you can pay off your loan, so you'll have to read your contract carefully to determine if you can pay off a loan early.

But just because you can pay off a loan early, should you?

couple trying to pay off a loan early

There Are Pros And Cons To Paying Off A Loan Early

On the surface, it might seem like only good could come from paying off a loan early. After all, it's always better to have less debt, right? Well, not necessarily. The truth is, there are some benefits when you pay off a loan early, but there are also some downfalls to consider. These downfalls may make sticking to the original timetable a better option.

Obviously, paying off a loan early means saving money on interest, because that's something that adds up over time. However, some lenders have prepayment fees you are required to pay if you want to pay off a loan early. Sometimes, these fees are more than what you're saving by paying off the loan early.

That's why you should always read your contract carefully. Make sure you know all of the rules and restrictions before you take any action.

You may also want to pay off a loan early if you plan on applying for another loan. Lenders often appraise your "debt-to-income ratio" to see how much of your income is being dedicated to paying off other debts. The fewer debts you have at the time of your loan request, the better your chances of getting approved for it.

However, believe it or not, having an active loan actually helps your credit score more than having a closed one. A loan adds diversity to your credit portfolio, so the longer you have an account open (assuming you always make on-time payments), the more it can help your credit. Having loans with low remaining balances can also help your score.

So, counterintuitive though it may seem, having a loan open for a longer period of time could actually help your credit score.

Ultimately, there are pros and cons to paying off a loan early: make sure you consider both sides before committing to a decision. 

paying off payday loan

Getting A Payday Loan With Utah Title Loans, Inc.

Now that you know paying off a payday loan early is an option, you may feel that you're in need of one. Don't worry; with Utah Title Loans, Inc. getting a payday loan is quick and painless. We'll walk you through the whole process right here.

You won't need much to apply: just your state-issued ID or driver's license, your most recent pay stub, and a blank check in your name. Getting started is as simple as filling out the online form on this website. Once you've done that, a representative will contact you as soon as possible to arrange a time to meet.

You'll need to bring the aforementioned items to the meeting. When there, the representative will verify your items and determine if you qualify for the loan. If you do, they'll walk you through what remains of the process, which is some simple paperwork. And you'll receive your loan either the day of approval or the following business day.

Overall, the approval process should only take about half an hour. It really is that easy! Better yet, you can apply even with bad credit. So, if you find yourself in need of a little financial aid, consider a payday loan from Utah Title Loans, Inc.; it can make all the difference in your hour of need.

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.

Mason Roberts

Mason Roberts is a seasoned economics writer and blogger with a knack for breaking down and simply communicating the ever-changing world of finance. He is philosophically committed to the premise that financial knowledge equals financial freedom.