Personal loans for many people have become a bit synonymous with daily life. Whether it is buying appliances, taking a vacation, starting their own business, or meeting some emergency expenses, personal loans are the easiest way of financing your requirements and the occasional indulgences. There’re many simple ways to pay down the loans. Before you select one, ensure you know how you can pay off the debt early with the particular lender you are using. There are pre-payment fees and specific steps needed for the lender to credit out things rightly when taking loans for bad credit.
1. Consider Biweekly Payments
one can pay off the loan by paying each two weeks rather than monthly. You will end up making an equivalent of extra payment every year. Once you pay off the debt with the biweekly payment, you must not see any dramatic change to the monthly costs. But, you will see huge savings when you pay off your debt over the years as you are decreasing the interest amount.
2. Make an extra payment every year
If you find making bi-weekly payments a bit tough and daunting but like an idea of making the additional payment every year, you may accomplish this goal by giving an extra payment every year. In this way, you will just feel the squeeze and still, you will shorten your loan life by many months, or years. Use tax refund, work bonus, and another windfall for making a once-in-a-year loan payment. Another simple way of making the extra payment is spreading this out throughout the year. You can divide the monthly payment and add this cost to the monthly payments every year long. You will be making one full extra payment of a year by not feeling any pinch.
3. Repay Fast on Higher Rate
Remember even though you meet your loan eligibility, to get one means you are attracting a higher rate of interest than a car or home loan. Whereas everybody agrees to a fact that personal loans are an important route when looking for financing options, it will lead you towards the debt trap in case you’re not able to repay this within your specified time frame. Suppose you have other current loans on the lower rates of interest, then it makes sense to repay the personal loan, which comes with the higher rate of interest, first. Prioritizing loans is one smart way to ensure you repay this fast.
4. Consolidate/refinance
It is a bit challenging to keep proper track of the EMIs & interest rate changes in case you have several loans. Missing the EMI means the penal interest & bad credit score. Think of consolidating your debt that involves combining many loans in one single loan. An idea is you avail the loan with a lower rate of interest than being paid on the current loans. Besides a lesser rate, having one single loan can provide greater ease in the repayment. For example, if you have a vast outstanding bill over multiple credit cards, then you may approach the lender for getting the personal loan, and where the entire outstanding amount will get repaid at a lower rate than the credit card.
5. Extra time means the extra job
Suppose you have got time, most likely weekends and evenings, you can pursue another job as a second source of income and put towards the loan payments. Suppose you are keen to give up your free time to have very few debt payments for paying in the long-term, it can put you a bit ahead of the future loan costs. Suppose you are a student, this can be revisiting an idea of waitressing a job or working during weekends when you fill the week with a career-oriented job.
