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Eight tips to paying off your loan debt faster

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If you are looking for tips and tricks to add to your loan repayment strategy, you’ve come to the right place. These pieces of advice outlined here will help you manage your debt and avoid overpaying thanks to interest. Read on to discover eight tips that will help you pay off your loan debt faster.

Pay more than the minimum.

When you receive a credit card or loan statement, they will tell you what the minimum payment you have to make is and you should always make that payment on time to maintain your credit score. However, if you have the ability to pay more every month, you’ll be able to save on interest and pay off your loan much faster. Rounding up to the nearest multiple of ten can be a quick and easy way to pay more than the minimum without setting yourself back much.

Make an additional payment every month.

If you’re only able to pay the minimum before the due date, that’s okay. It might be hard to budget for a larger payment before the due date as you might also have rent due around that time. Consider making an extra payment once a month as even the smallest amount can significantly reduce the total amount you’ll be expected to pay while you’re paying off your loan. If you get paid bi-monthly, it’s easy to plan on paying your minimum with one of your monthly paychecks and plan on paying a small amount like $20 with the other.

Refinance your loans.

If you received your loan when you were in a worse financial position than you are in now, you may be able to refinance your loan and be able to proceed with a lower interest rate. If your income has increased and your credit score has increased lately, contact your lender and see what refinancing options they may have available. Refinancing can also adjust the minimum amount due every month which can also help reduce your stress levels as you prepare your budget.

Set up autopay.

While this tip won’t necessarily help you pay off your loan faster, it will help you avoid making any mistakes that will add time to your repayment schedule. Setting up automatic payments is a quick and easy process and you can typically choose how much you would like the automatic payment to be. For example, you can select to have the automatic payment amount to match the minimum payment owed or you can choose to make a larger payment amount. Setting up autopay will help you stay on track.

Stick to a strict budget.

It sounds obvious, but sticking to a strict budget is easier said than done. At the beginning of every month, sit down and create a budget that is going to really work for you. It’s easy to make a budget that only includes rent, food, insurance, and debt payments – but is that really realistic? You need to be honest with yourself and allow yourself at least a small entertainment budget or factor in a gym membership. You don’t have to restrict yourself from everything, but you should aim to stick to the basics while you’re paying off your loan.

Check if loan transfers are an option for you and your loan type.

In some cases, it’s possible to transfer the balance of a high-interest credit card to another credit card with a much lower interest rate. Some banks even offer specialty cards that are designed to be used in this way. While it doesn’t erase any of your debt, it can help limit the amount you’ll be expected to pay in interest which will lead to a shorter repayment schedule.

If you have multiple loans to pay off, consider a debt consolidation loan.

This is only a helpful tip in the event that you are juggling multiple loan payments and are overwhelmed by the amount you’ll pay in insurance across all loans and lines of credit. If you are able to qualify for a debt consolidation loan at a great rate, you can take the funds from that loan and use them to pay off all of your other loans in one swoop. This allows you to save on interest and create a situation where you only have one monthly payment to handle.

Extra income = Extra payments

While it’s definitely okay to treat yourself a little bit if you get a huge bonus at work, for example, you should aim to put the majority of any extra funds towards your debt repayment. Make a plan for what you’ll do with extra funds. For example, you can decide in advance that you’ll be putting 70% of extra income towards debt, 20% towards savings, and 10% can be used for a fun expense. Create a formula that works for you and your situation and stick to it until your loan is paid off!

If you stay focused and incorporate these tips and tricks into your loan repayment strategy, you’ll be on track to get your loan paid off as fast as you possibly can. Remember that half of what makes paying off a loan so challenging is the extra amount in interest that you’ll be obligated to pay over time especially when you only make the minimum payments. These tips help you avoid overpaying and help you find yourself in a situation where you can comfortably manage your finances and avoid extra stress.

Story by Pavel Khaykin

augusta free press
augusta free press
augusta free press

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