Why You Should Think Twice About Early Loan Repayment
Early loan repayment sounds like a good idea on the surface, doesn't it? The less time you spend paying off a loan, the less time there is for interest to accrue, right? There couldn't possibly be any downsides to that... or could there be?
The truth is, while early loan repayment has some benefits, there are some reasons to avoid it as well. We're not saying you absolutely shouldn't do it, but you should think twice about it, and here is why.
Things To Consider About Early Loan Repayment
Loans Can Help Your Credit Score
It may sound strange but having an active loan that you are paying off can actually help your credit score quite a bit. If you understand exactly how credit score works, this might not surprise you so much. You see, your credit score is heavily influenced by how well you pay off debts that you may have. Paying debts on time, consistently, improves your credit score.
Most people think of credit cards as far as this kind of thing is concerned, but it's true for loans as well. Having an open loan means having to make payments on it fairly frequently. If you make those payments on time every time, your credit score will be improved.
What Happens When You Pay A Loan Off Early?
But if you go with early loan repayment, you reduce the amount of time you have on the loan and thus reduce how many times you can make a timely payment on your debt. This is to say, even though early loan repayment won't outright hurt your credit score, doing so reduces how much of a positive impact a loan can have if any.
However, we can understand why you might think this isn't a big deal. After all, your credit score might miss out on some improvement but is that really more important than avoiding all of that interest that would accrue over the lifespan of your debt? Well, that too can be more problematic than you know.
Some Loans Have Early Repayment Fees
OK, so let's be real: lenders want you to pay interest. Lending money is a business and that's how a lender makes it. So, most lenders would certainly prefer it if you didn't shoot for early loan repayment. Because of this, some loans include an early repayment fee that you should be aware of.
These fees require you to pay a certain amount of money for the ability to pay off your loan early to start with. On the surface, that might still sound preferable to you; surely, that early repayment fee is less than the cost of all that interest, right? Well, usually not, actually.
Again, interest is how lenders make money. So, if you want to skip paying that interest with early loan repayment, then the fee for that early loan repayment will probably cost even more than the total sum of all the interest you would have paid. At the very least, the fee will probably match the cost of the interest.
However, not all loans have these. Some loans do not have early repayment fees, and others do. You'll always need to read the details of your loan contract to see whether or not this applies to you. That includes the fine print!
Getting A Payday Loan With Fast Payday Loans, Inc.
If you have decided that a payday loan is a good idea for your situation, we here at Fast Payday Loans, Inc. of Florida can help you with all of your needs. Here, getting a payday loan is quick, simple, and easy. In fact, the entire process is so short that we can walk you through it right here.
First, you'll need to fill out our online payday loan inquiry form here on our website. It just asks some questions about your situation and lets us know that you are interested in discussing a payday loan with a representative. After submitting that form, one of our representatives will contact you via phone as soon as they can.
Once contacted, you can elect to go through the payday loan process either in person or over the phone. Either way, you'll need a state-issued ID, your most recent pay stub, and a blank check from a checking account in your name.
If you want to do the process over the phone, the representative will walk you through everything. If you want to visit the store and do it in person, the representative will set up a time for you to meet with them at a physical location. Either way, the process is quite similar: the representative will verify your documents and determine if you qualify.
Walk Out With Your Loan Today
If you do qualify, you'll be able to get your money as early as the day of the meeting or the following business day. And with your new knowledge of loan repayment, you can feel confident approaching the process of a new loan. As you can see, it's about as simple and easy as you can get, so if a payday loan is right for you, don't hesitate to give us a call!
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.