Overview
Paying off your loan faster can help you save money on interest, reduce financial stress, and free up funds for other financial goals. Since Upstart loans have no prepayment penalties, you can make additional payments at any time without extra fees.
This guide provides smart strategies to accelerate loan repayment while minimizing costs.
1. Make Extra Payments When Possible
✔ Apply Additional Payments to Principal – Making extra payments directly reduces your principal balance, which decreases the amount of interest you’ll pay over time.
✔ Round Up Your Payments – If your monthly payment is $267, consider paying $300 to gradually chip away at your balance.
✔ Make Twice-a-Month Payments – Instead of making one monthly payment, consider splitting your payment into two smaller payments each month. Over a year, this results in one extra payment toward your loan, helping you pay it off faster.
💡 Example: A borrower with a $10,000 loan at 10% APR and a 5-year term would pay about $2,748 in interest over the life of the loan. By making one extra monthly payment per year, they could save hundreds in interest and pay off the loan months earlier.
2. Use Windfalls & Extra Income to Pay Down Debt
✔ Apply Bonuses, Tax Refunds, or Side Income – Whenever you receive an unexpected financial boost, consider using part of it to make an extra loan payment.
✔ Reallocate Savings from Paid-Off Debts – If you’ve recently paid off a credit card or another loan, put that freed-up amount toward your current loan balance.
💡 Tip: Even small lump-sum payments can significantly reduce the total interest paid over time.
3. Avoid Extending Your Loan Term When Refinancing
✔ If you refinance your loan, be mindful of choosing a longer loan term—even with a lower interest rate, extending your loan term can result in paying more in total interest.
✔ If refinancing lowers your monthly payment, consider keeping your original payment amount to pay off the loan faster.
📌 Related Article: Auto Refinancing: How It Works
4. Reduce Unnecessary Expenses & Redirect Funds Toward Your Loan
✔ Cut Back on Non-Essential Spending – Review your budget to identify subscriptions, dining out, or entertainment costs that you can temporarily reduce.
✔ Automate Your Savings & Loan Payments – Set up automatic transfers to put extra funds toward loan payments each month.
💡 Tip: Even redirecting an extra $20–$50 per month toward your loan can make a big difference in reducing interest and shortening repayment time.
5. Set Up AutoPay to Avoid Late Fees & Maintain a Strong Credit Score
✔ Enroll in AutoPay to ensure payments are made on time every month.
✔ Timely payments help build your credit, making it easier to qualify for lower interest rates on future loans.
💡 Note: Upstart does not charge prepayment penalties, so you can pay off your loan early at any time.
Next Steps
If you’re ready to pay off your loan faster, consider making extra payments, using windfalls, and cutting unnecessary expenses to free up more funds.
📌 Related Articles:
- Making Additional or One-Time Payments
- Understanding Loan Terms: APR, Principal, and Interest Explained
- Setting Up and Managing AutoPay