Here's Why Suze Orman Says You Should Pay Off a Personal Loan as Quickly as Possible

It pays to heed her advice.

Any time you take on debt, whether in the form of an auto loan, credit card balance, or personal loan, you sign up to pay interest. In some cases, the amount of interest you're charged will be more moderate. Personal loans, for 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 a balance forward. 

But even though personal loans can be an affordable borrowing option, financial guru Suze Orman's advice is to pay yours off as quickly as you can. And it's not just because doing so will save you money on interest. 

Debt can impact your outlook

Personal loans often let you accelerate your payment schedule without penalty. And if you repay a personal loan early, you could end up saving yourself money on interest.

But Orman says that saving money is only part of the equation. Rather, she says, the simple fact that you're in debt could be messing with your self-esteem and holding you back professionally. And that, she says, is reason enough to shed your debt quickly, even if it's reasonably affordable.

Carrying debt, says Orman, can make you feel powerless. After all, you're beholden to a lender and are on the hook for monthly payments. And that could limit your ability to make money. 

Say you're interviewing for a better-paying job in the hopes of snagging a high enough salary to shed your debt for good. In that scenario, you may be really desperate to get hired. That's something, Orman cautions, that can come through in an interview -- and hurt your chances of getting the opportunity you're after.

The stress of being in debt also has the potential to impact your performance at work. And if you're not performing well, it could hurt your chances of snagging a raise or getting promoted.

On the other hand, Orman says that once you're out of debt, your confidence level might soar. And that, in turn, could help you excel at your current job or have an easier time getting a new one if that's a route you want to take.

How to pay off a personal loan quickly

You may not have piles of cash around to pay off your personal loan (if you did, you wouldn't have needed to borrow money in the first place). But if you're careful with your spending, you might manage to eke out extra money each month to chip away at your balance.

Getting a second job is another avenue worth exploring. These days, the gig economy is booming, so there's ample opportunity to pick up a side job. And since the money from that gig won't be earmarked for existing bills, you'll have a chance to use your earnings to chip away at your debt until it's gone.

Personal loans might come with reasonable interest rates. But that doesn't mean you should drag yours out. Paying off your loan sooner could work wonders for your outlook -- and help your financial picture improve.