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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Should You Use a Credit Card Loan?
Con: You Might Be Penalized
Money Moves You Will Be Thankful For

Content: 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. [
Read: Best Mortgage Refinance Lenders. ] Pro: You Will Have More Freedom From Debt
The sooner you pay off your loan, the sooner you are free from the responsibility of that debt, which can give you tremendous peace of mind. " You have fewer obligations to keep you up in the middle of the night," says Todd Christensen, education manager at Money Fit by DRS Inc., a nationwide nonprofit credit counseling agency. If you owe a debt, the creditor has certain legal rights that can limit your financial freedom, he says. When you default on a loan backed by collateral such as your home or car, you risk losing that property.