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 wish to have an easy process of repaying your loan and don’t become a burden to your finances, the following are tips that 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. By doing so, it will help you accomplish 3 things including less interests as your payments are applied more often, you’ll pay extra payment as 1 year consists of 52 weeks and doing this for the duration of your loan shave off months.
But just before you proceed in such, it is a must to sit this one out with your lender. It’s due to the reason that you may unknowingly pay off your balance earlier than you’ve been expecting or be penalized.
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. A simple example for this is if you have to make at least 289. 84 dollars auto payment monthly but chose to make 300 dollars as you have rounded it up, then it will give you an extra of 10.16 dollars every month or a total figure of 121.92 yearly. 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 – 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.