5 Tips for Paying Off a Loan Early

couple sitting at a table figuring out ways to pay off a loan early

If you’re like most Americans, you owe money on loans. Whether that’s credit card debt, a mortgage or a car loan, debt is part of your life. That means you’re looking at hundreds of dollars in interest over the life of the loan. There’s also the mental load of knowing you’ll be paying on the debt for years to come.

Here are some simple tricks for paying off a loan early to lighten the load and make a difference in the total interest you’ll pay over the life of your loan.

Make bi-weekly payments

Instead of making monthly payments toward your loan, split the payment into two bi-weekly payments each month. This way, your payments will be applied more often so less interest is accrued.

You’ll make 26 half-payments in a year, which translates into an extra full payment each year. This shortens the life of the loan by several months or even years. For example, if you choose this method with a 30-year mortgage, you can shorten it to 26 years.

Round up your payments

Round up your monthly payments to the nearest $50 to shorten your loan. For example, if your auto loan costs you $320 each month, bring that number up to $350. The difference is usually too small to make a tangible dent in your budget, but large enough to knock a few months off the life of the loan and save significantly in interest. Check out our free Increase Your Monthly Payment online calculator to see how much of an impact increasing your monthly loan payment can make.

Make one extra payment each year

If you can’t make bi-weekly payments, but you like the idea of an extra yearly payment, accomplish the same goal by committing to just one more payment in the year. You’ll only feel the squeeze once (tax or bonus time, perhaps) and you’ll still shorten the life of the loan.

You can also spread that extra payment throughout the year. Divide your monthly payment by 12 and then add that cost to your monthly payment all year long. You’ll be making an extra payment while hardly feeling the pinch.


If interest rates have dropped since you took out your loan or your credit has improved dramatically, ask us about refinancing—whether your existing loan is with us or not.

Refinancing makes the most sense if it can help you pay off a loan early. With a lower interest rate, you should easily be able to afford shortening the life of the loan.

Boost your income

Cut the life of your loan short by earning more money and putting the extra cash towards your loan. Consider selling stuff on Amazon, moonlighting as a consultant or taking on a side hustle. Even a job that nets you an extra $200 a month can make a big difference in your loan.

Check with your lender before trying any of these approaches as some loans have penalties for making extra or early payments. However, by paying off a loan early, you’ll end up paying less in interest which will save you money in the long run.