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. 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 – it is wise that you automatically make half of the payments to the lender every 2 weeks rather than the typical monthly payment. 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. 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. 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. Upon the last term of your loan, this is cut off automatically, allowing you to make big savings.
If you like to take it up a notch, you can even add an extra 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 – 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 use the money from bonus on work or tax refund which helps in repaying your loans faster. 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.
We can’t deny the fact that repaying your loan puts a huge strain on your budget but you can lighten up this burden by making yourself aware of the tips discussed.