If You Read One Article About Loans, Read This One
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. If you want to make loan repayment less stressful and challenging for your finances, then the points below can help you out.
Tip number 1. Make biweekly payments – making half of the payments automatically to your lender every 2 weeks instead of doing the typical monthly payment is a smart thing. It will help in accomplishing 3 things as you do so and these include having less interest because your payments are being applied more frequently, you can get to pay an extra since a year composes of 52 weeks and this can shave off months on your loan.
On the other hand, before you get to do this, you have to talk this one with your lender. The reason for this is that, there’s a possibility that you might be penalized for the extra payments you have made or have paid your balance earlier than what you expect.
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. This is almost the same when you are paying your loans bi-weekly, you don’t necessarily need to have excess funds to cut off few months of your term. 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. That is automatically lessened on your payments on the last term of the loan.
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. Over that period, it will add up to a big amount allowing you to save on interest while shortening the loan term.
Tip number 3. Make one additional payment – if you do not have the cash flow to commit to making a biweekly payment, you can still achieve the same result by means of making 1 extra payment per year. Use money from bonus on work or tax refund to help in paying your loans faster. Another possible option is by dividing the monthly payments you are making to 12 and add the amount to all future payments you are about to make.
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.