Sometimes, when people take a personal loan, they like to make only the minimum payments and pay it off little by little. That is perfectly fine, of course, because it is a simple and attainable way to manage the payments that suits both you and the lender. Apart from this there are ways to pay them before if you wish. Do you like how this sounds? Here are some tips:
Pay a little every 2 weeks
The custom is to make monthly payments, which is useful in itself, but why don’t we change the payment plan every two weeks instead? By doing this, you will reduce the payment term and could potentially pay a little less interest. Always talk to your provider first. They will be happy to advise you on what a new payment plan will entail and can help you reach a new agreement.
Make ready debt payments
If you have more than one loan to pay, make a list of them and see how much you owe. Start by: a) paying the loan with the lowest interest rate first and then putting the newly available money in the loan with the lowest interest rate on the list; or b) deal with the loan with the highest interest rate and deal with the loan with the next highest interest rate. This second method is the most ideal if possible.
You do not have to focus solely on increasing your income to pay off the loan. Combine this strategy with other measures, such as reducing unnecessary expenses, so you can make larger payments. Do not go out for drinks every Friday and eat out. Cancel the Netflix or Prime subscription for a while. Calculate a budget and allocate the money you save to pay off the loan.
Pay in rounded numbers
Suppose you are paying the loan in installments of € 172 per month. Why not round this to € 200 per month? After 12 months, that would be an extra € 336 that you have contributed to the payments and will reduce the term of your loan over time.
Make a single payment
Have you received a tax or inheritance refund? Have you had luck in the lottery? An unexpected gain is a perfect opportunity to repay the entire loan or, at least, promise a significant amount for payments. The other option is to divide your payments each month by 12, take the result and add it to the payments.
Lenders are always happy to receive your money back a little earlier than originally agreed, so try to make more than the minimum payments. Why not have a conversation with your provider to reach a new agreement?