It pays to follow his advice.
- Personal loans can be an affordable way to borrow.
- Unloading that debt could do wonders for your prospects – and that’s an important thing.
Every time you incur debt, whether in the form of a car loan, credit card balance or personal loan, you agree to pay interest. In some cases, the amount of interest charged to you will be more moderate. Personal loansfor example, tend to charge reasonable interest rates, whereas with a credit card you might pay two, three or four times as much interest to carry over a balance.
But while personal loans can be an affordable borrowing option, financial guru Suze Orman’s advice is to pay yours off as quickly as possible. And it’s not just because it will save you money on interest.
Debt can impact your outlook
Personal loans often allow you to accelerate your repayment schedule without penalty. And if you pay off a personal loan early, you could end up saving money on interest.
But Orman says saving money is only part of the equation. On the contrary, she says, the mere fact that you are in debt could damage your self-esteem and set you back professionally. And that, she says, is reason enough to get rid of debt fast, even if it’s reasonably affordable.
Having debt, says Orman, can make you feel helpless. After all, you owe a lender and are responsible for monthly payments. And that could limit your ability to make money.
Suppose you are interviewing for a better paying job in hopes of getting a high enough salary to get rid of your debt for good. In this scenario, you may be really desperate to get hired. It’s something, Orman warns, that can show up in an interview — and hurt your chances of getting the opportunity you’re looking for.
Debt stress can also impact your job performance. And if you’re not performing well, it could hurt your chances of catching a raise or get a promotion.
On the other hand, Orman says that once you’re debt-free, your confidence levels could skyrocket. And that, in turn, could help you excel at your current job or get a new one more easily if that’s a path you want to take.
How to repay a personal loan quickly
You may not have a lot of money to pay off your personal loan (if you did, you wouldn’t have needed to borrow the money in the first place). But if you watch your spending, you might be able to earn extra money each month to reduce your balance.
Getting a second job is another avenue to explore. These days, the gig economy is booming, so there are plenty of opportunities to land a side job. And since the money from this gig won’t be applied to existing bills, you’ll have the option of using your earnings to pay down your debt until it’s gone.
Personal loans can come with reasonable interest rates. But that doesn’t mean you have to drag yours. Paying off your loan sooner could do wonders for your outlook and help your financial situation improve.
The Ascent’s Best Personal Loans for 2022
Our team of independent experts have pored over the fine print to find the select personal loans that offer competitive rates and low fees. Start by reviewing The Ascent’s best personal loans for 2022.