Should Christians Pay Off Loans ASAP?

“Do not withhold good from those to whom it is due,
When it is in your power to do it.
Do not say to your neighbor, “Go, and come back,
And tomorrow I will give it,
”When you have it with you.”‭‭
Proverbs‬ ‭3‬:‭27‬-‭28

According to the Bible, Should You Repay a Loan as Soon as You Possibly Can?

Say you have $20k in savings and you owe $20k on a student loan, are you obligated by Scripture to take that money and wipe out the loan?

For some of us, there'd be a desire to put that money to use elsewhere, especially if you have a low interest rate. However, if you have the money with you, why say to your loan officer, "Come back later"?  As a general rule, if we owe someone something, we should pay it back as soon as we can.

However, the question is, "What do you actually owe?".

You Owe Monthly Payments

The bank is not expecting you to pay the full amount of the loan all at once. You are not withholding good by paying off a loan one monthly payment at a time.

• Loans are usually given to be repaid over 10 - 30 years
• Banks expect to make money on interest over time

In short, the minimum monthly payment is the bank telling you how much you owe in a given month. Sure, you are in debt for $20k, but you might only owe $350 per month on that debt.

You are not biblically obligated to pay back a loan at a rate faster than the minimum monthly payment.

Valid Reasons to Pay Off a Loan Slowly

There are various reasons why it might not make sense to pay off the loan ASAP:

• Your loan has a low interest rate (below 5%)
• You would like to direct funds towards purchasing a house
• You would like to direct funds towards starting a family

Valid Reasons to Pay Off a Loan ASAP

You may want to prioritize paying back a loan if:

• You have a high interest rate loan (above 5%)
• The monthly payment will be burdensome long-term
• The loan is an emotional burden

What about a loan from a relative?

Loans from friends or relatives are risky because you are putting your relationship with that person on the line.

Oftentimes loans from relatives are given with little to no terms. When a friend or relative gives you a loan, it is them showing you that they believe in what you are doing and want to support you. You should honor them for that by paying back your loan as quickly as possible.

If your relative gave you a time frame of when they would like to be paid back, you need to honor that. If there's no specified time frame of when they would like to be paid back, pay them back as soon as possible.