loan repayment

Is An Early Loan Repayment A Good Idea?

Perhaps you are considering getting a title loan but are confused about whether you can pay it off early. Many loan repayment strategies can help you decide if paying off the loan early is right for you. 

In this guide, we'll explore how paying off your loan early can help you gain financial freedom and save cash. 

How To Know If Early Loan Repayment Is A Good Idea

If you're considering early loan repayment, you may ask yourself, "Is it a good idea to pay off a loan early, or should I stick to the repayment schedule instead?" These are valid concerns, so let's explore whether or not an early loan repayment is a good idea.

woman holding piggy bank thinking is an early loan repayment a good ideaFirst Off, How Do Loans Work?

At the most basic level, a loan is quite simple. You sign a contract with a lender who lets you borrow money from them. You agree to pay back what has been borrowed (with interest) on specific dates. Generally, a loan gets paid back in increments rather than all at once. This means you make a series of small payments on particular dates.

In some cases, you must abide by these dates no matter what. In other cases, you may be allowed to pay off the entire loan (or any portion) early but must pay an extra fee. And with some loans, you can pay it off early without any other concerns or restrictions.

So, whether or not you can pay off a loan early depends on the contract terms. But let's assume you are in a situation where you can make an early loan repayment. Even if you can, should you?

The Pros And Cons Of An Early Loan Repayment

Is an early loan repayment a good idea? Well, it's not as clear-cut as all that. Early loan repayment can be both a good idea and a bad idea. It depends on your situation. Mostly, it depends on the terms of your contract, though there are also some things to consider regarding your credit.

Let's start with the terms of your loan first. As mentioned, some restrictions may exist on performing an early loan repayment. Some contracts will require you to pay a fee to pay off a loan early. In some cases, this fee can be more costly than the money you would save on interest by paying early in the first place.

So, early loan repayment is a bad idea in that case. But if there is no such fee to worry about with your loan, you can save a fair deal of money on interest by paying off the loan early. But even then, while that is beneficial, there are some drawbacks, specifically for your credit score.

How Loans Affect Your Credit Score

Without getting too deep into how credit score works, here's one thing you need to remember: having debts active (and being regularly paid off) is suitable for it. Having an open credit card on which you make regular payments improves your credit score; the same happens with a loan.

Having a loan for a more extended period, so long as you make consistent on-time payments, boosts your credit score. So, paying off a loan early can reduce how much of a loan's positive effect on your credit score. There are some benefits to keeping a loan going for the entire duration.

So, ultimately, an early title loan repayment can be a good idea, but it depends on various factors and what you value the most. It can be a good move if you want to save money and there is no early payment fee. If there is an early payment fee, it may cost you more. The impact of credit scores could be worth it for some people.

woman applies for an emergency loan on her phone

Getting A Title Loan With Tennessee Title Loans, Inc.

So now that you know a bit more about early repayment loans, maybe you've determined that a title loan would be a good choice for you. If you want an easy title loan in Tennessee, look no further than Tennessee Title Loans, Inc. With us, the process is quick and efficient. We can lay out the entire thing right here.

You'll need a few things to start:

  • A state-issued ID
  • A lien-free title to your vehicle
  • Proof of income
  • A vehicle

Please fill out the inquiry form here on our website, and a loan representative will contact you via phone as soon as possible. They will set up a time and place to meet with you, which can be a store location or a location of your choosing.

In that meeting, the representative will verify your documents and determine if you qualify for the loan and how much money you can get based on the value of your car, which is determined by its age and condition. If approved, you can get your money either on the day of approval or the following business day. That's all there is to it.

Get Started With An Emergency Title Loan Today

Paying off a loan early has pros and cons. Be sure to assess your situation and your goals before making your decision. If you need a title loan, feel free to contact us anytime. You can begin the process by filling out our online inquiry form.

We are always ready and willing to help you meet your financial needs via an online Tennessee title loan. It's simple, quick, and painless—even those with bad credit can be approved!

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.