For people who got debts and want to be free from it for good, it is most likely that they have tried a number of different methods to repay it. The points below can be a big help if you wish to make your loan repayment less challenging.
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.
Before you do this on the other hand, make sure that you have clarified your plans 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 effortless and effective way of paying extra without missing the funds is done simply by rounding up the payments you make. Similar to paying your loans biweekly, you do not need lots of extra funds in slashing few months off the loan’s term. For instance, if you got auto payment that was approximately 289. 84 dollars but has opted to round your payment to 300 dollars, it will create an excess f 10.16 dollars a month or 121.92 annually. 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. For the said period, rest assure for it to add a significant amount that then lets you shorten your loan and save on interest.
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. 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.