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After adding a loan payment to your budget, whether large or small, you may want to start paying it off quickly, getting out of debt as fast as possible. After all, you do not want to be in debt forever!
While this is a great idea, how exactly can you go about paying your loan faster? That part is easy! Here are a few tips and tricks to help you pay off your loan quickly.Loans can be an unfortunate necessity to pay for those big-ticket items. Here's how to pay them off faster! Click To Tweet
An effortless way to pay off your loans quickly without noticing too much of an impact on your finances is to round your payment up.
This means, if your monthly loan payment is $85.10, pay an even $100. This extra $14.90 a month won’t seem like much as you are paying it, but you will have made a full two additional payments on your loan by the end of the year.
Not only will this help reduce the amount of interest that you owe on the loan, but you will also be done paying the loan much faster than if you had stuck with the basic payment.
Round numbers are also easier to remember, helping you budget better using simple math.
Consolidate Your Loan Payments
Taking out a new small loan may help you save money.
If you currently have a variety of loans, maybe a car loan, a student loan, and a credit card bill, it can get tricky managing them all. You are also likely paying different interest rates on each loan which can be confusing and even a wrong financial path to go down.
Using small loans, you can pay off all your current debts in full, then each month, you will only have to make one easy loan payment, hopefully at a lower rate. Not only is this much simpler, but it is also a sound financial plan to pay your debt quickly.
And in case you have a Parent Plus loan, student debt consolidation is a great option as well.
Refinance Your Loan Payment
Whether your loan is significant or just a small loan, you can always opt to refinance. Perhaps interest rates have come down since you first got your loan, or your credit score is better now.
Either way, you may be able to get a better rate on your loan if you refinance or apply for a newer, better loan. Interest can be a big and expensive part of your loan payment, so if you can lower your rate by a point or two, that will be a huge plus.
If you can refinance at a lower rate, you can pay less each month, giving you more cash in your pocket. You can also choose to continue paying the same monthly payment you had in place before you refinanced (the amount you are financially use to paying) and just pay the loan off faster!
Paperless and Autopay
You may be surprised to find that some lenders will offer you discounts when you opt for paperless billing or sign up for autopsy, where your bill is linked to your checking account and paid each month automatically.
Take a look at what your lender can offer you and sign up for any service that may save you a few dollars.
Even if you can get a small deduction from your loan, this can be worth it! Every penny counts, after all!
Paperless billing and autopay are easier anyway as you do not need to remember to make your payments every month- they are already done for you.
Save money and simplify your bills? That sounds like a win!
One Extra Payment
If you can make just one extra payment on your small loan each year, you will save on interest and pay your loan much faster. Make it your goal to make a whole additional payment by the end of the year (and try to do it sooner rather than later!).
When you make the extra payment, see if you can apply the additional payment directly to the loan principal, lowering the loan amount and, therefore, the percent-based interest rate immediately. Anytime you can make a full extra payment or even half, you definitely should!
Doing this is highly beneficial, and you will be out of debt in no time!
Using any one of these great techniques will help you pay off your debts quickly. Choose which works best for you or, choose them all! That debt will disappear right before your eyes.
Do you pay more than the minimum on your loans?
Krystle Cook – the creator of Home Jobs by MOM – put her psychology degree on a shelf and dived into a pile of diapers and dishes instead. She is a wife and mother to two rambunctious boys, sweating it out in her Texas hometown. She loves cooking, DIY home projects, and family fun activities.