Making a personal loan online to consolidate debts and get rid of debt is a valid option. But after using the money to pay off credit card debt and other bills, you need to think: how can I repay the personal loan? After all, after clearing your doubts, this is the only obstacle between you and financial independence, and you have to plan to get there.
Below are some of the best methods to pay off your loan as fast as possible and see yourself totally debt free! Keep reading and learn from us.
1. Make bi-weekly payments
Send half the payments to your lender every two weeks instead of the regular monthly payment. This will help you with three things:
- Less accrued interest because your payments will be applied more often;
- Each year of the loan you will pay an extra installment. That’s because we have 52 weeks a year, which equates to 26 payments every two weeks. So in a year, you would be paying the equivalent of 13 installments, instead of only 12;
- Doing this during the loan period will reduce the time it takes you to take it off.
Be sure to discuss this with your lender before making bi-weekly payments to ensure that you have the appropriate discounts and reduced interest rates.
2. Round Your Payments On Your Personal Loan
Rounding up your payments is an easy way to pay extra without even losing the funds. Just like making bi-weekly payments, you do not need a lot of extra cash to hit a few months after the term of your loan.
For example, if your automatic payment is $ 264.12, you can choose to round to $ 300, which is an extra $ 35.88 per month. After 12 months, this will represent an additional $ 430.56 (or almost two additional payments).
You could even go one step further and beat your payments by $ 50 or $ 100 a month. Over time, this amounts to a significant amount, which will help you save money on interest and shorten the term of your loan.
3. Look for ways to get extra income
Anyone who has extra spare time can find on the internet several ways to make extra income. Whether selling things you no longer use for those who have a car, making extra bucks may be what was needed to take out the personal loan faster.
Although at first the extra income appears in small amounts and does not seem to help much, they will definitely add up over the year and could make a big difference in paying off your debt.
4. Make an extra payment
If you do not have the cash flow to commit to bi-weekly payments, you can get the same result by making an extra payment each year. Use the money from an income tax refund or the 13th salary to help pay off your personal loan faster.
Or you can split your monthly payment into 12 and add this amount to all future payments. For example, you can split the amount of your installment from $ 264.12 to 12 and add the result ($ 22.01) to each payment. Each payment would be increased to R $ 286.13, equaling one extra payment per year.
Paying off your personal loan in advance will save you money on interest and shorten the overall loan term. Imagine what you could do with your extra money: saving for retirement, making home improvements or maybe a trip.
There are many benefits to paying off your loans early, but one of the biggest is less stress and less risk! So choose your strategy and get started right now!