Why You Should Pay off Loans as Fast as Possible
If you have extra money available to you, consider paying off debt. Lowering your debt is always the best choice. There are significant long term financial benefits when you reduce your debt. Paying off loans should be one of the top considerations when allocating money, you have at your disposal.
The first step is to evaluate your debts, in particular those with high rates of interest. These are often your credit cards or small loans (cash advance or payday loans). You will save money when you eliminate debts early.
Save Your Money
The best reason to pay off debt early is to save yourself money and reduce or stop paying interest. Interest charges are just money you lose for borrowing (keep in mind a credit card is just a form of borrowing). Now you can’t do this with your home due to the high cost of getting it. But the interest rate on a home loan is low so your month-to-month cost is not as great. That does not mean that you can’t pay more towards your house if you are able to, you still save a lot of interest expense.
Improve Your Financial Strength
Once you reduce your debt, you’ will be in a much stronger financial position. You can use the money now available to you (that you were paying for the debt) to speed up the process of paying other debts. For most people this means paying the smallest, high interest debts first and then work on bigger debts. One reason to make your house the last one to pay off is that, unlike most debts, home interest is a tax deduction.
Get Some Peace of Mind
Eliminating debt can really reduce your stress. Financial difficulties is one of the leading causes of relationship breakups and arguments. It is stressful for everyone involved. Easing your financial strain is a good choice. You can’t put a price on your happiness.
What is the best way to pay off loans?
It is not complicated to take extra money to wipe out a debt.
Does paying off my car loan help my credit?
Most auto loans have low interest today. You should look at other loans or credit you use that have higher interest rates. Also, do not close credit cards that are paid off. Open credit actually helps your credit scores but put the paid off card(s) away, so you are not tempted to start running up a balance again. Paying on time is the biggest help to your credit scores.
How do I pay off credit card debt?
Start by determining how much extra you can pay each month. Next, decide whether you want to pay down your debt starting with the smallest balance and highest interest rate combined – generally the best choice. Then, make your minimum payments including the amount extra you have allotted for that credit card or debt. When a debt is paid off, apply what you have been paying to the next debt.
What happens if I stop paying or miss payments on my Payday Loan?
If you have a payday or cash advance loan missing payments may get you sent to collections. Something you want to avoid. If you are going to miss a payment, contact your lender first and ask what they can do to assist you. Many lenders will work with you to create a new payment schedule. Keep in mind you may have extra fees to pay for changing your loan terms.
Can the Government help me get out of a Payday Loan?
NO. The state governments already regulate all lending including payday loans. There are differences from state to state so check your state’s website for details. However, the laws are set and there are no bailouts or relief specifically for payday loans.
It is always the best policy to never take out a loan unless you are sure you can repay it. Although payday loans rarely affect your credit scores, most loans do. Which only makes your situation worse if you default or pay late on any loan.
If you are short a little cash, you might consider an online loan or emergency loan.
FaaastCash has been in business more than a decade and provides service 24/7 and 365 days a year. When you need an emergency loan, consider requesting one with us by filling out the form. With more than 100 direct lenders waiting to review your loan request, you have a great chance to be approved and get your needed cash, fast. Online loans are a common way to handle small, urgent money needs.