Skip to main content

7 Realistic & Doable Ways to Pay Off a Loan Early

7 Realistic & Doable Ways to Pay Off a Loan Early

Credit card debt, lines of credit, mortgages, school, and car loans. These are all loans, forms of borrowing money, for a fee, that you’ll need to pay back at some point in the future.

And, the farther out that pay-off date is, the costlier the loan will be overall.

For those who want to, though, it is possible to repay your loan(s) sooner than the original plan. Doing so potentially yields many financial and personal benefits.

So, if you’re ready to learn some strategies for “investing in your debt,” keep reading!

how early is too early for paying off a loan

How to Pay Off Your Loan Early

Let’s kick this off with a few numbers, to give you an idea of the American debt landscape.

  • Almost 80% of Americans have some level of debt.
  • According to a 2020 study, on average, Americans have a debt balance just shy of $93,000. (This is a mix of all kinds of loans and credit.)
  • 53% of Americans state that reducing debt is their top priority.
  • Debt is a cause of anxiety for half of all Americans.
  • Most Americans think it will take them at least five years to get debt-free. But 15% to 25% believe they’ll be paying down their debt for the rest of their lives.


  1. If you have a loan, you’re not alone.
  2. If your debt is sizable, you’ve got company.
  3. If you want to work your way to being debt-free, you can!

This brings us to how to do that. Here are some approaches to slashing your loan balances ASAP that you can begin enacting today.

1. Make & Commit to a [Feasible] “Get Out of Debt” Plan!!!

This will help you get into the right mindset, set expectations, and keep you organized and focused on your goals. Plus, writing your intentions down and tracking your progress will increase your chances of success.

The exercise of planning and documenting may also reveal areas of untapped savings or financial resources that may turbocharge your early repayment plan. A plan can help you prioritize so that you spend responsibly — so as to not add to your debt unnecessarily.

2. Enable Autopay

Missing a payment is the exact opposite of paying off your loan early. One of the best ways to ensure that doesn’t happen? Autopay. By automating your payments, you know the money’s always scheduled to go to the lender on time, every time.

Valley Credit Union’s mobile banking and online banking and bill pay tools make this really quick and easy to do!

how to pay off loan ealry

3. Pay More Than the Minimum

Allocate extra money to chip away at your debt balance. Try rounding your payment up to the nearest ten- or hundred-dollar mark. Or tack $25 on to each installment.

You can finance this by tightening your budget and/or increasing your income. Side hustles, birthday checks, selling unwanted stuff, your tax refund — these are just some possible sources of cash you can put towards debt.

4. Pay More Than Once a Month

Paying off your loans at an accelerated rate will get you across the finish line sooner. Instead of doing a single monthly payment — do two or more. Another version of this is to make more than 12 “monthly” payments in a calendar year. 

5. Consolidate Your Loans

Combining multiple pools of debt into one could help you reach that zero balance you’re after. Doing so can cut your financing costs and simplify the administration of your repayment plan.

You can use a debt consolidation calculator to see if this option makes fiscal sense for your situation.

6. Make a Lump Sum Payment

In this scenario, you’d send a large payment towards your loan balance. For example, if you owe $5,000 and your regular monthly payment is $300 — you’d send in a check for $2,000.

It’s a really effective way to quickly make a big dent in your debt!

7. Refinance Your Debt

When you refinance, you’re essentially getting a new loan to replace your existing loan. During the process, you’ll have an opportunity to negotiate better terms — ones that can hasten the end date of the loan as well as its total cost. This is especially true if you refinance through a credit union that’s incentivized to do what’s in the best interest of its members.

And remember, shortening the length of your loan guarantees you’ll pay it off in less time.

couple paying off credit card

Early Loan Repayment FAQs

It’s smart to go into loan repayment with open eyes and a fact-packed brain. To that end, here are answers to very common questions related to fulfilling your loan obligation sooner than contractually required.

How Early is Too Early for Paying Off a Loan?

And, closely related, when does it make sense to repay a loan early? The answer to both: It depends on your situation and your loan.

Some loans have penalties for prepayment. Other times, you may find that there are undesirable tax or credit score consequences to early repayment. You’ll need to assess the ramifications based on your loan, tax environment, and credit profile. 

You also don’t want to pay off your loan if it causes undue hardship in other areas of your life. It’s better to cover your monthly necessities (e.g., food, shelter, bills, etc.) and establish an emergency fund than repay your loan ahead of schedule. You won’t get ahead by getting behind.

Which Debt Should I Pay Off First?

If you do have the bandwidth to put your debt-reduction plan into action, you’ve got some options on how to go about it. You could start with paying off the loans that have the:

  1. Highest interest rates
  2. Smallest balance
  3. Most impact on your credit score

You could also take a hybrid approach, doing a little of each, or consolidate your debts.

Each method has pros and cons. But it’s good to know you can flex repayment to your circumstances.

woman paying off credit card online

Got Loan Repayment Questions? VCU Can Help!

Understanding the ins and outs of loans and debt repayment is a big deal. Fortunately, Valley Credit Union has a talented team on hand to assist you with financial planning, answer questions about making payments, and so much more. We also have several helpful articles and other resources on these topics.

Ready to get serious about your loan? Let us know how we can support you.

About the Author

 Justin Roberts, Vice President of Lending

Justin Roberts is our Vice President of Lending and has been in the financial industry for over 18 years. He is an Oregon State University Graduate and has just completed Western CUNA Management School. When he is not focused on helping the members at Valley, you will find him coaching his two sons and volunteering his time to help develop the youth in our communities through sports.

View All Blog Posts