Tips for Repaying Your Loan
Working your pay to repay your debt and become free from it makes you try all possible ways to do it from saving money, increasing your income and paying it faster. The points below can be a big help if you wish to make your loan repayment less challenging.
Tip number 1. Make biweekly payments – it is a smart move of you to pay the loan every 2 weeks rather than making the payments every month. As you do so, it can actually help you achieve 3 things such as making an extra payment because 1 year has 52 weeks, doing this for the term of your loan can actually shave off months of your loan and it can lower your rate of interest because the payments are applied more frequently.
Before you do this on the other hand, make sure that you have clarified your plans with your lender. It’s because of the reason that there is a chance that you may be penalized for extra payments or paying your balance earlier than expected.
Tip number 2. Round up your payments – an effective and at the same time, effortless way to pay extra from your loan without missing any funds is done by rounding your payments. Much like paying loans biweekly, you don’t need lots of funds to slash several months off the term of your loan. To give you an example, if you have an auto payment to make that was roughly around 289. 84 dollars, but opted to round the payment to 300 dollars which is basically an excess of 10.16 dollars per month or a total of 121.92 a year. Upon the last term of your loan, this is cut off automatically, allowing you to make big savings.
If you want to, you can also go a step further and amplify your payments by adding an extra of 50 to 100 dollars a month. For sure, over that period, it adds a big amount to it letting you save interest while also shortening the term of the loan.
Tip number 3. Make one additional payment – let us say that you can’t commit to making bi-weekly payments due to your cash flow, that would not be a problem actually as you can still do this by simply making an extra payment annually. You can repay your loans faster by using cash from your work bonus or even tax refund. There is another way of doing this and it’s by dividing to 12 your monthly payments and add the quotient to the payments you are set to make for the rest of the months.
It is undeniable that repaying your loan can put a great strain on your finances but by following these 3 tips, you can make it lighter.