Paying A Loan Off Early To Raise Your Credit Score

Paying A Loan Off Early To Raise Your Credit Score

Another customer wanted to make extra payments toward the principle amount he owed, and he wanted to know if it would reduce his interest rate. In this case by paying more every month, you’re essentially cutting down the number of months that you would need to pay. So to give you an example, if you take out a $720 loan with a term of 36 months and your payments $20 a month, let’s say instead of twenty you send in $25 a month. Then you’ll actually have that loan paid off in 29 months, so that essentially would save you over 7 months of interest payments.

The interest rate itself does not change, but any extra money you can afford to throw on top of your monthly payment will shorten that loan period, saving you money in the long run.