Some of us have a very complicated relationship with our loans, meaning that if we don’t manage them correctly, they can easily turn on us. The major uphill battle we face in this relationship is the interest costs that never seem to go away, however, with some easy techniques, you can return to having a good steady relationship with your loan and hopefully pay it off faster than expected.
The first technique is to increase the frequency of repayments but the keeping the amount the same, so if you have a loan that is monthly, do your best to pay half of the amount owed fortnightly instead. I know this may seem a little difficult because some of us like to not think about paying off our monthly bills until the last minute. However, if you can get in the habit of doing this, then it means that you will make double the payments per year, which will eventually reduce the amount you owe and even the interest you will pay in the future.
After doing that, keep in mind that every dollar counts. Some of us may come into contact with some extra or unexpected money that we would instantly want to spend on something shinier, try to resist doing this. The best thing you could possibly do to ensure that you pay off a loan quick and avoid those interest rates is to put every dollar you can into reducing that loan. You would be surprised at how much time could be shaved off having to pay your loans and the amount of money you could save. Having said that, it may be in your best interest to make lump sum repayments towards your loan. Keep in mind the money you could be saving once that loan is completely paid off and big payments could actually take years off the amount of time you would be paying that loan.
If it’s financial possibly to do so, shorten the term of your loan. You may have a rough road ahead of you due to the amount of repayments that may increase, however you will pay off your loan so much faster and overall save a noticeable amount on your interest costs. Also, make sure that you keep your monthly repayments the same when your interest rate goes down. What this means is that more of each payment will go towards repaying principal, which is another way to generally save interest costs and reduce your unsettled balance a lot faster.
Disclaimer: The above information is general in nature and not intended to be financial advice. You should consider seeking professional advice before following any suggestions in this blog/website.