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 – it is wise that you automatically make half of the payments to the lender every 2 weeks rather than the typical monthly payment. 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.
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. 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. 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. 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. For sure, over that period, it adds a big amount to it letting you save interest while also shortening the term of the loan.
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. 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.