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. 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 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. 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 like to take it up a notch, you can even add an extra 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 use the money from bonus on work or tax refund which helps in repaying 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.