How to Pay off Your Personal Loan Fast
One of the best ways to pay off personal loan faster is to add extra money to each month’s payment. As long as the lender doesn’t charge a prepayment penalty for paying off the loan early, it’s one simple step you can take to pay off your personal loan early.
For over 60 years, the Credit Union of Southern California (CU SoCal) has provided quick pre-approvals, no application or funding fees, and other great benefits for our valued Members.
Call CU SoCal at 866.287.6225 to schedule a no-obligation loan consultation, or apply online today!
A personal loan is a loan provided to an individual by a lender for an unspecified use. In other words, a personal loan can be used to purchase whatever you need, with no restrictions.
Some common uses for a personal loan include making home repairs, paying for college tuition, medical bills, a wedding, funeral costs, car repairs, and unexpected expenses. The possibilities are endless.
Be sure to talk to a representative at the credit union or bank where you have your accounts, and determine if you are eligible to borrow the amount you need at an interest rate you can afford.
Are Personal Loans Worth it?
When you need cash in a hurry to cover an emergency expense, such as a car repair, home repair, or to pay for a funeral, a personal loan is a good choice.
However, for non-emergency expenses, it can be more cost-effective to save-up the funds you need, rather than take on new debt or pay interest on a large loan amount.
How to Pay Off a Personal Loan Faster
As with any loan, the sooner you pay it off the more money you will save by not paying interest on the loan. As we mentioned earlier, some lenders will charge a prepayment penalty if the loan is paid off early, so before you sign to accept any funds, ask the lender if the loan you are considering has a prepayment penalty.
Top strategies for paying off a loan early include:
- Setting aside money from your paycheck to put toward paying down the loan. Paying an extra $50 or $100 each month will shave hundreds off your loan amount.
- People who get a bi-weekly paycheck often find it easier to make bi-weekly extra payments, rather than monthly payments. Any extra money you can pay toward the loan amount is good, so use the schedule that works best for your unique situation.
- Consider getting a part-time job. If you’re serious about paying off your personal loan fast, a part-time job can make a large impact in paying off this and other debt...and put more money in your pocket to increase your savings.
- Reduce household and personal expenses. Are there things you can do without in order to pay down your loan quicker? These can include cutting cable or reducing your service level on cable and phone, skipping manicures and pedicures, doing your own lawn or pool maintenance instead of using a professional service, and preparing meals at home rather than eating out or relying on fast-food.
- Homeowners can consider refinancing their mortgage. With mortgage interest rates still very low, it could be beneficial to refinance your home and get some cash-out to pay off any high-interest loans or debts that you have. You’ll save money all around on a lower mortgage rate while eliminating burdensome debt.
Will Paying Off a Personal Loan Early Hurt Your Credit Score?
Obtaining a personal loan can affect a person's credit score. According to MyFICO.com, new credit makes up 10% of a FICO® Score. When you apply for new credit, inquiries remain on your credit report for two years. FICO Scores only consider inquiries from the last 12 months. Getting a personal loan can lower your credit score at first, however, as long as you make on-time payments and pay back the loan in full, obtaining a personal loan can actually improve your credit score. Learn more at Does Paying Off a Personal Loan Early Hurt Your Credit Score?
Where to Get a Personal Loan
Different types of personal loans are available from credit unions, banks, and online lenders. Each lender will offer different rates and terms, so be sure to shop around and ask questions. We always recommend starting by talking to a representative where you currently have your checking and savings accounts. Taking advantage of established financial relationships will make the application and funding process quicker and easier.
Banks: Traditional banks tend to have higher credit score and income requirements than credit unions. If you happen to have bad credit, getting a good rate on a personal loan from a bank could be challenging. If you need the money in a rush, banks may take longer to release funds, so ask how long the approval and funding processes will take before you apply.
Credit Unions: As not-for-profit organizations, credit unions reinvest profits back into the organization, so Members benefit from lower interest rate loans. Typically, credit unions will waive fees or charge lower fees than a bank. CU SoCal does not charge fees on personal loans.
Online Lenders: While numerous online lenders offer personal loans, they can’t offer the personalized service of a credit union or local bank. They may also have higher interest rates. Be sure to compare rates and fully understand the terms of the loan. When borrowing money online, be sure to verify that you’re working with a reputable company and not a scammer. Here are some tips from the Federal Trade Commission on avoiding scams.
Learn more about where to get a personal loan at a good rate.
CU SoCal Personal Loans
CU SoCal is helping Southern Californians get the funds they need to pay for life’s necessities. Our personal loan features include:
Financing from $500 to $30,000
- Terms up to 120 months for the lowest possible monthly payment
- Line of credit option for access to funds when you need it
- No application fee
- No prepayment penalty
- No funding fee
Learn more about CU SoCal Personal Loans.
Why Savvy Consumers Choose CU SoCal
For over 60 years CU SoCal has been providing financial services, including car loans, personal loans, mortgages, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation consultation with a personal loan representative.
APPLY FOR A PERSONAL LOAN TODAY!