The pros and cons of paying off loans early

Juggling debt isn't fun.

But we have mortgages, car loans, and many people are still paying off those school loans. And, sometimes we come into a little extra cash and think about knocking those bills out in one fell swoop. In reality, a car loan is the shortest financial obligation and may be the easiest to pay off. The mortgage - that's a tougher one. But again, if you had the money to do it, the pros and cons for all loans would be about the same.

If we pay off a loan early, this will free up cash. This will take debt off our credit reports. Even if you pay some down, it can shorten the life of the loan, and you pay less interest on that loan.

While paying off the loan frees up cash, putting a large chunk of money down can take away some daily spending power. If you are at the end of the loan, most of the loan's interest is paid off, so that extra cash may be better put to use in an emergency fund or to make money for you elsewhere. A student loan early payoff may mean missing out on some loan forgiveness options or tax benefits.

OK, let's work with wanting to whittle down debt without having a windfall of cash to consider. 

Make biweekly payments rather than one monthly payment. By year's end, you are making one extra payment. Thirteen payments rather than 12. Then, round up each of those payments to the nearest $100, shaving off a little more. Also, the $100 you could send separately, attaching a note that directs them to apply that extra money to the loan's principle, not the interest. But you must make sure your loan provider allows this option. Not all do.

Also, you do not have to use a third-party financial group to help you do this. Call your lender and simply ask for this option.