In this era, owing money towards a large loan is common.
Whether it’s the thousands in your credit card debt, a hefty mortgage you are fighting to complete, or the car loan you are struggling to fulfill. For a lot of people, loan debt is simply part of today’s life. Knowing that you owe thousands of dollars and that you will be paying back for years to come can somehow get depressing. It doesn’t have to be that way.
I will share simple yet smart tactics you can apply to decrease your burden and start paying down your debt. Continue reading!
1. Round-Up to the nearest $50
How much is your monthly repayment?
There is no fixed rule dictating that you pay only the agreed amount. To pay your loan faster, you can consider rounding off the monthly payments to the nearest $50.
Let’s do some quick math. Say, for instance, you take a car loan of $10,000. The interest is 10%, and the payment period is 60 months. Your monthly payment will be $212.47. By paying the loan in the stated 60 months, you will have spent a total of $2748.23 as interest.
What if you decide to round up the monthly payment to $250? Rounding off the figure means that you will take fewer months to clear the debt, 47 months in this case. Besides, you will have made quite a saving in terms of interest, as you will have paid $2214.69, saving $533.54.
2. Don’t Miss your Payments
That seems obvious, but many people miss a few payments. Times are hard right now, but this shouldn’t give you a reason to miss a loan repayment. Missing the payment should be avoided at all costs.
Whenever you miss a payment, it means that you will fall behind your scheduled payments. This means that you prolong the repayments period. Besides, you can’t forget to mention the penalties that result from missing a payment. You will end up paying more money in interest.
If you had borrowed a car loan, your car might end up repossessed. If you click here, you will learn that not many lenders are willing to repossess your vehicle, for example. To prevent all this, then you must consider paying your loan on time.
To stay on top of your loan payments, make sure you follow our advice on building a personal budget and staying on top of your spending.
3. Make Bi-weekly Payments
If your budget allows, then you can consider making half the monthly payment after every two weeks.
Well, this may seem like an unnecessary move, but you should know that it can benefit you. When you choose the bi-weekly trick, it means that your payments will be applied often. Hence, less interest will accrue.
Another thing to note is that with bi-weekly payments, you will have made 26 half-payments a year. This translates to an extra full payment each year. This sounds good when dealing with a long-term loan, such as a mortgage, for example. With the trick, a 30-year mortgage is likely to be shortened to 26 years.
4. Get Yourself a Side Hustle
Most of my tips here will speed the loan repayment process, but earning extra cash can make the process even easier. Even an extra $100 per month can make a big difference. For this reason, getting a side job is a wise move.
You have a talent or skill that you rarely utilize. It’s time you made use of that skill and dedicate the extra income towards servicing your loan. With the internet, there are many side jobs that you can take out there. It doesn’t necessarily have to be a decent job. As long as it adds some money to your account, it’s worth the chase (If you want to learn more about my personal journey getting extra income, see how I earned extra money with my blog with my first income report).
Platforms, such as Upwork, have opportunities for those seeking an extra income. There, you can either choose a job based on your profession or try something different. Also, you can choose to take things an extra mile and start a physical business. Say you are good at baking, you can open a shop to sell your sweet cakes to your customers.
Opening a side business can be complex as you need capital. Remember, you have a loan to repay, and this means your finances are tight. You can consider a partnership or borrow some cash from friends or family. With a side hassle, you can be sure to repay the borrowed money and service your loan on time.
Repaying a loan can be stressful. However, it shouldn’t be that way. As long as you are enjoying what the loan enabled you to accomplish, repaying should be easy. Shared in this article are professional tips you can borrow to fasten the repayment period. By following the information shared, you will not only pay your dues early, but you will also save some cash in the long run.