How to Pay Off a Personal Loan Faster

Personal loans can be a useful tool for accomplishing your financial goals. You may have taken out a personal loan to pay off debt, consolidate bills or finance large purchases. If your loan has a fixed payoff date, you may be wondering how to pay a loan off faster than you’re currently scheduled. The good news is, it may be easier than you think. Making little changes and finding even a small amount of money to put toward paying off loan balances can go a long way.

Here are four ways to help pay off loans faster:

1. Make biweekly payments, rather than monthly

Making a smaller loan payment every two weeks is one of the best ways to pay off a loan faster. Doing this can shorten the life of your loan. Biweekly payments can also reduce the total interest paid on daily simple interest loans and, in some cases, on precomputed interest loans, potentially saving a substantial amount of money. Paying more than the minimum in two smaller installments can also be easier from a cashflow perspective.

For example, let’s say your normal monthly payment is $300. If, instead, you make a $175 payment every two weeks, you’re actually paying $50 more each month in two smaller chunks. As long as you continue to pay a little more than the minimum amount, you can get closer to paying off your personal loan early.

But be sure to consult your lender before starting biweekly payments. Different lenders have different policies, and you should make sure your new payment structure will produce the results you are looking for.

2. Make an extra payment toward your personal loan

When looking for the best way to pay off debt, some people might prefer to make one or more extra payments per year. Others may choose to pay a small extra payment on top of their regular loan payment when they can. Here are ways to come up with the money for extra payments:

• Set savings aside throughout the year
• Use birthday and holiday money
• Put work bonuses toward payments
• Find side hustles that can earn extra cash

These are just some basic ideas if you’re exploring how to pay off debt fast. Remember, every situation is different, and the impact on your loan can vary based on when you make your additional payment(s).

3. Round up your loan payment

If you have room in your budget, round up your payment amount. Rounding up your loan payment is a simple yet effective method to paying off loan balances faster. After a few months, your new payment amount will become routine, and the extra money will chip away at your principal balance.

Here’s how it works: Let’s say you have a monthly payment of $440.27, and you decide to round it up to an even $500/month. That extra $59.73 you’re paying each month is deducted from your principal and can save you some serious money in the long run.

4. Look into refinancing your loan

If your personal loan provider offers refinancing, it may be worth considering. Refinancing your personal loan can help you pay it off faster, make payments more manageable or possibly save money on interest. Be sure to consider the following before you decide to apply for refinancing:

• Credit score – If your credit score has improved since you acquired your loan, you could have better odds of getting approved for refinancing. The three major credit bureaus (Experian, TransUnion and Equifax) developed the FICO score®, which is the most well-known credit score.
  
• VantageScore Another important factor is your VantageScore®, which is designed to be measured against FICO and is used by creditors to assist with lending decisions. If you’re a OneMain customer, you can sign into your OneMain account to view your VantageScore now or get it by contacting one of the credit bureaus directly (this may require you to pay a fee).
  
• Payment history – Do you have a good payment history? Lenders will want to see that you pay your accounts on time.
  
• Loan amount – The amount being refinanced may also influence your odds of getting approved. But some lenders put more weight on credit score and payment history than the remaining loan amount.

However, be aware that refinancing may extend the life of your loan. Also, be mindful of current interest rates at the time you’re considering refinancing. If rates are rising, refinancing may not be beneficial at that time. Consult your lender or financial advisor before making your decision.

Should you pay off a personal loan early?

Any one of these methods can help you pay off loan balances faster, but don’t rush into it without doing research. As you compare options, consider speaking to your loan specialist or financial advisor to figure out which approach is the best fit for your needs.

Can I pay off a OneMain personal loan early?

OneMain customers can pay off personal loans early, and OneMain will not charge a prepayment fee. To pay off a loan early, you can make a one-time payment for the total outstanding balance or pay an extra amount when you make your regularly scheduled monthly payment.

If you’re considering paying off a personal loan early, check out our personal loan calculator to estimate how quickly you can reach your goal and continue your progress toward financial freedom.

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The credit score provided is for educational purposes only. We do not guarantee that the credit score shown will be used by us or third parties to assess your creditworthiness or eligibility for any particular product or service or for employment.

This article has been updated from previous postings in May 2016, February 2019,and October 2022.
Matt Diehl, Joe Guida, and Melina Duffett contributed to this article.