by Cynthia R.

 

Borrowing money, when done responsibly, can be incredibly useful for accomplishing your financial goals. Debt is a common part of everyday life, and most people have some form of it they need to repay. According to Experian data, the average American has over $100,000 in debt across credit cards, loans, mortgages, and more.

With a few small, consistent changes, you could pay off your loan (or loans) ahead of schedule without making huge lifestyle changes. Follow these five tips from ACE Cash Express to repay your loan faster and keep money in your pocket.

Why Pay Off a Loan Early?

When it comes to managing debt, the sooner you act, the better. Paying off your loan early benefits you in a few ways:

• Savings on loan interest and possibly fees. Interest accumulates every month you carry a balance, and higher interest rates increase the total amount you repay over the life of the loan. For most loans, the quicker you pay it off, the less you may spend overall.
• Reduced stress. Carrying less debt is one of the most effective ways to reduce financial anxiety.

Please note: some lenders charge a prepayment penalty for paying off a loan early. Check your loan agreement or contact your lender before making extra payments to confirm there are no penalties.

5 Tips for Paying Off a Loan Faster

Prioritize Your Debts

Do you have multiple loans or credit cards with outstanding balances? Create a list of all your debts and identify which one you need to tackle first using a repayment strategy, such as:

• Debt avalanche method: Make larger and/or extra payments on the highest-interest debt while paying the minimum on lower-interest debts.
• Debt snowball method: Focus on the smallest balance first, regardless of interest rate. Slowly increase the minimum payment until it’s paid off, then roll that payment into the next lowest balance.

Update Your Budget for Monthly Payments

A detailed budget is the key to a successful debt repayment plan. Reviewing your budget quarterly allows you to make informed adjustments as finances change. Keep track of your expenses to see where you spend your money, what monthly payments you can realistically afford to pay down the debt, and how to best manage your money.

Use our budgeting guide to audit your monthly spending. Look for recurring charges you’ve forgotten about, subscriptions you no longer use, or costs in categories like dining out and entertainment where you can temporarily cut back. Budget strategically to avoid adding to your debt and ensure you have enough to pay your outstanding balance quickly.

Set Up Automatic Payments

Payment history is part of your credit score, and on-time payments are critical. Scheduling automatic payments will hold you accountable and ensure you never miss the minimum monthly payment.

If you want to pay off debt faster, try to pay more than what’s due. Putting a little extra money toward your loan each month will save you in the long run.

Make One Extra Payment Per Year

It may seem small, but making even just one additional loan payment per year can shorten your repayment period significantly and reduce the total interest you pay.

There are a few ways to make an extra payment each year:

• Use a tax refund or work bonus. These are ideal for making a lump sum payment because they don’t require cutting from your regular budget.
• Switch to biweekly payments. Instead of one monthly payment, make a half-payment every two weeks. Because there are 52 weeks in a year, this results in 26 half-payments, which is the equivalent of 13 full monthly payments instead of 12. Please note: some lenders may not accept biweekly payments or may charge a fee to adjust payments. Check your loan documents or ask your lender for details.
• Earn extra income. Pick up a side gig, sell items you no longer need, or take extra shifts at work to earn dedicated funds you can put toward your loan.

When making extra payments, confirm with your lender that the additional amount is being applied to the principal balance, not loan interest.

Monitor Your Accounts

Monitoring your progress will keep you motivated and help you catch issues, such as missed payments, before they compound.

Stay on track by:

• Using a debt payoff calculator. Loan calculators require you to input your loan amount, term, and interest rate to project your payoff date accurately. Tools like this debt calculator show how additional payments can reduce your loan term and save money on interest.
• Tracking milestones. Celebrate reaching 25%, 50%, and 75% of your loan payoff goal to stay motivated throughout your journey to becoming debt-free.
• Reviewing your loan statement monthly. Check that your payments are applied correctly toward the principal balance and that your loan balance is decreasing as expected. That way, you know no unexpected fees or errors are affecting your repayment progress.

Frequently Asked Questions

What is the fastest way to pay off a personal loan?
The fastest way to pay off a personal loan is to make extra payments directly toward the principal balance as often as possible, whether through an additional monthly payment, biweekly payments, a tax refund, or a work bonus. Combining this with a tight budget that minimizes new spending will help you pay off your debt ahead of schedule.

Does paying off a loan early hurt your credit score?
Paying off a loan early is unlikely to lower your credit score in the long-term. It may actually improve it by reducing your overall debt load. In some cases, closing a loan can cause a minor, temporary dip because it affects your credit mix and the average age of your accounts. But the overall benefits of carrying less debt generally outweigh any downside.

What should I know about federal student loan repayment?
Federal student loans come with specific rules. Direct Subsidized and Unsubsidized Loans currently carry a fixed interest rate of 6.52% for undergraduate borrowers, while Direct PLUS Loans currently have a fixed rate of 9.07%. Federal loans also carry an origination fee of 1.057% of the loan amount in 2026. Loan rates are subject to change annually, typically on July 1.

Most federal student loans include a six-month grace period after graduation before payments are required. If you’re on an income-driven repayment plan, you may qualify for loan discharge after 20 to 25 years of qualifying payments.

What happens if I can’t make an extra payment each year?
That’s okay! Even making your regular minimum monthly payment on time is a positive step. Focus on automating your payments, avoiding new debt, and look for small budget adjustments over time.

 

This blog is not intended to provide any tax, legal, financial planning, insurance, accounting, investment, or any other kind of professional advice or services. To make sure that any information or suggestions in this blog fit your particular circumstances, you should consult with an appropriate tax or legal professional before taking action based on any suggestions or information that we provide.

 

Sources:

Experian. “Average American Debt by Age In 2025.” Nov. 19, 2025. https://www.experian.com/blogs/ask-experian/average-american-debt-by-age/.

Consumer Advice. “How To Get Out of Debt.” Mar. 1, 2018. https://consumer.ftc.gov/articles/how-get-out-debt/.

Nadler, Cassandra. “Pay Off Loans Faster and With Less Interest Using Simple Strategies.” First New York Federal Credit Union, Dec. 3, 2025, https://firstnewyork.org/pay-off-loans-faster/.

R., Cynthia. “Budgeting Tips to Make Your Money Go Further.” ACE Cash Express, May 20, 2026. https://www.acecashexpress.com/blog/budgeting/budgeting-tips-to-make-your-money-go-further/.

Horizon Federal Credit Union. “5 Ways To Pay Off A Loan Early.” Accessed Aug. 7, 2026. https://www.horizonfcu.org/financial-success-center-articles/5-ways-to-pay-off-a-loan-early/.

Porte. “True Debt Calculator | Porte.” Accessed Aug. 7, 2026. https://www.portefinance.com/resources/true-debt-calculator/.

Capital One. “Does Paying off a Personal Loan Early Hurt Credit?” June 30, 2026. https://www.capitalone.com/learn-grow/money-management/does-paying-off-a-personal-loan-early-hurt-credit/.

Studentaid.Gov. “Federal Student Aid.” 2024. https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized#interest-rates/.

Studentaid.Gov. “Federal Student Aid.” Accessed Aug. 7, 2026. https://studentaid.gov/understand-aid/types/loans/plus.

Studentaid.Gov. “Federal Student Aid.” Accessed Aug. 7, 2026. https://studentaid.gov/help-center/answers/article/what-is-origination-fee.

Studentaid.Gov. “How to Prepare for Student Loan Payments – Federal Student Aid.” Accessed Aug. 7, 2026. https://studentaid.gov/articles/prepare-for-payments/.

Studentaid.Gov. “Income-Driven Repayment Plans.” Accessed 7 Aug. 2026. https://studentaid.gov/manage-loans/repayment/plans/income-driven.