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. 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 a smart move of you to pay the loan every 2 weeks rather than making the payments every month. 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.
But just before you proceed in such, it is a must to sit this one out 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. Much like paying loans biweekly, you don’t need lots of funds to slash several months off the term of your loan. 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 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 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 repay your loans faster by using cash from your work bonus or even tax refund. You can also divide your monthly payments to 12 and then, add the amount to all your future payments.
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.