A personal loan is a good bet if you are in need of money. However, you, as a borrower, are required to pay interest on the loan amount. Over some time, this interest can add up to a substantial amount of money. So, it is in your best interest to pay off your loan at the earliest. Here are some tips on how you can repay your loan quickly.
Pay Twice a Month
Instead of making a single payment every month, consider making bi-weekly payments. Since you are making more payments, you will pay less interest on the remaining balance. Also, the extra payment will help you shave off a few months, at the very least, of your loan tenure. Make sure to speak to your lender about this before you change your payment structure, since you may be penalized for making advance payments.
Rounding Off Payments Can Help
If you are unable to make additional payments regularly, consider rounding off your monthly payment. For instance, if you are paying $930 toward your loan every month, consider making it $1,000. It may not seem like a lot, but this extra amount will add up and help you repay your loan a lot faster.
Make an Additional Payment Whenever Possible
If you happen to receive a bonus at work or your income suddenly increases, consider making an additional payment toward your loan. You can do this every time you unexpectedly receive a lump sum.
Refinance Your Personal Loan
Refinancing your loan is one of the quickest ways to lower the interest you pay toward the loan and save money over time. If your financial situation has improved since when you first got your personal loan, you may be able to qualify for a new loan with a better rate. Keep in mind, however, that your new loan should not have a lower interest rate but should also have lower lifetime interest.
Repaying your personal loan early will help you save a good amount of money. That said, ensure that you don’t break your emergency fund to repay your loan. It’s always a good idea to have enough money in hand for emergencies.
