Title: The Pros and Cons of Paying Off Loans Early | US News
Headings: The Pros and Cons of Paying Off Loans Early
The Pros and Cons of Paying Off Loans Early
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Pro: Paying Off a Loan Before It Matures Can Save You Money
Pro: You May Improve Your Credit Profile
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Pro: You Will Have More Freedom From Debt
Con: You Might Starve an Investment to Feed Your Debt
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Con: You Might Be Penalized
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Content: "The sooner you pay off your debt, the less interest you pay over time," says Madison Block, marketing communications and programs associate at the nonprofit American Consumer Credit Counseling. In particular, paying off high-interest debt can deliver significant interest savings. Once that debt is gone, you can allocate more money to savings, Block says. Pro: You May Improve Your Credit Profile
When you pay off a loan, your account is closed in good standing. At this point, you have eliminated the risk to your credit score posed by late or missed payments. A paid-off loan can also lower your debt-to-income ratio, a key metric lenders use to make credit decisions. That means if you pay off an auto loan or a personal loan before you apply for a mortgage, you could qualify for better terms. [
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