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. 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 – it is wise that you automatically make half of the payments to the lender every 2 weeks rather than the typical monthly payment. 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.
On the other hand, before you get to do this, you have to talk this one 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 – as a matter of fact, rounding up your payments help you to make payments become effortless and effective. 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. 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. 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 – you are still able to attain the same result by making an extra payment per year in case that you do not have the cash flow to be able to commit in making a biweekly payment. Use money from bonus on work or tax refund to help in paying 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.
Repaying your loan can become lighter and easier if you will follow the aforementioned tips.