Loan Types: Repay your loan faster
Applying for a loan is an essential method that we use to buy our dream home or finance a business venture, or simply take a family holiday.
As loans are an essential part of how we acquire what we want and need, it is an important aspect of your current financial status. But what if you were told you could save huge amounts of money by simply knowing how to repay your loans back faster?
When you repay loans, these are often set at a fixed term, or you have more flexibility, in which you are able to repay above the standard, agreed-upon loan repayment amount. This is a desired feature if you are looking at repaying your loans back quicker than the prescribed time. Not only saving you money on interest but also increasing your credit score and creditworthiness. It is important to check the terms and conditions regarding early repayment before you take out your next loan. If you are unsure of what the lender’s fees or requirements are regarding early repayment then make sure to ask them to highlight them in the contract.
Not only is this desirable for your future loan applications but it also gives you the financial wellbeing that you deserve. Many borrowers have paid off some of their biggest loans such as home loans, personal loans, business loans, and more by simply following a number of handy tips.
The type of loan will determine the methods you could use to repay the loan back faster. Here are a few secrets that could help you pay your loan back faster, depending on your loan type.
Repay your Personal loans faster
Personal loans are best for when you need financing for something of a personal nature. These can include your payday loan, short-term loan, quick loan and traditional personal loan.
This could be to fund a holiday, pay for the wedding of your dreams or to buy a lavish item of sorts.
Regardless of what you decide to buy with your personal loan amount, repaying it back as soon as possible should be a priority. It is one way to ensure that you are saving money by paying less interest and not paying more than you should be on anything.
With a few professional tips, you can decrease the total amount of interest you are repaying but also save time repaying your loan. This is especially useful if you are planning on applying for another loan to fund your next venture or desired item.
Maintaining an excellent credit score is how you can ensure that you qualify for the loan amount that you would like to apply for. And lenders will have no problem approving loans for credit-worthy applicants.
All you need to do is use one or more of the tips below to make sure you repay your personal loan in record time.
If your budget allows you a weekly allowance for miscellaneous items and you have some of that money left at the end of the week then you should consider putting this money into your loan. You can direct debit this amount directly into your credit card or store card. Or you could put this money aside and make an extra lump sum payment at the end of the month.
Consider rounding up your payments
This is a small trick that could potentially save you a lot in the long run. You will be paying extra without even noticing a difference in your cash flow. For example, if your personal loan repayment is R1 221.20 – consider paying R1 300.00. The extra funds might go unnoticed to you but will save money with each payment you round to the next highest figure.
Extra repayments are the best way for you to save when repaying your loan. Use any additional funds you receive to repay your loan to ensure that you are lowering the interest that is charged to the principal amount per annum. You could be given a bonus at work or receive some money for your birthday. It may be a good idea to put this money into paying off one of your smaller loans completely.
How to repay your Student loan faster
Another huge debt accumulation is that of student loans.
Over four years of studying you will require a lot of funds to see that you make ends meet. More often than not, student loans are needed to ensure you have the finances available to you to succeed academically.
What makes student loans unique is that generally the interest amount is repayable during the duration of studies and once you have secured full-time employment you will start repaying the actual loan amount.
Although you might not have all that much funds available to you during your studies, there are ways you can aim to reduce the principal amount and save money.
Student loan calculator
Use extra money wisely
If you have a part-time job or you could even have a special craft talent to make something to sell or if you receive an allowance consider saving some of this to start making payments on your principal student loan amount. This will mean that once you start your working career you will have less money to pay back.
Increase the interest amount paid monthly
Usually, student loan lenders request the smallest amount of interest to be paid while you are studying; you can use this to your advantage by increasing the amount when and if possible. By the time you start repaying your actual loan amount, you would have succeeded in lowering the amount that now needs to be repaid.
Finances for business-related purposes
The loan amount of a business loan can vary substantially and could very well be quite a large amount. Paying off your business loan is a sound business idea and offers personal benefits.
Here are a few tips available to assist you with repaying your loan as soon as possible and in doing so, it will help your business reach a comfortable financial position.
Additional repayment plan
Aim to make at least one extra repayment. This will allow you to repay your loan quicker but will also save your business valuable money. If you do not have the additional repayment funds available to you, consider using tax return funds or bonuses. The extra amounts paid to your loan will be a worthwhile investment.
If you are able to find a better interest rate, refinancing your business loan is another way to repay less on your loan and you could shorten the duration of your repayment. It is for this very reason that you should always shop around for better, more competitive interest rates.
Look at other cost-saving solutions
If you find the right business loan lender, you might also find some extra benefits such as discounts on paperless statements and auto payments. For every little amount that you save, you could be finalising the repayment of your loan sooner than you think or had anticipated.
Repay your Home loans faster
A home loan is most probably the largest loan amount that any individual will commit to in their life. Because it is such a big amount it is paid back over a long period of time which means that the interest portion of the loan is a lot of money. If you can pay extra money into your home loan at any time it will help you save money.
If you have any extra funds from a bonus or a financial windfall then you can pay this money into your home loan. You simply need to contact your lender and ask them for the account number where you can pay the money into. If your home loan is with your bank then your account will often be linked to your existing accounts and you can simply transfer the funds into your linked home loan account.
Make sure that you take advantage of falling interest rates. If you have a fluctuating interest rate on your home loan then your monthly payment amount will be less when the interest rate comes down. You can contact your lender and ask them to keep your debit order amount the same as it was before. You will not even know that you are paying more into your home loan but the amounts add up and help you pay off your loan quicker.
Repay your Car loan faster
Car loans are often times paid back before time if you are selling the car. It is easy to get the settlement amount from your lender for your car at any specific time. This is the amount that they require from you to fully pay off your car loan at that time.
Car loans are one of the few loans where it does not pay you to pay extra into the loan over the agreed-upon terms. Before you decide on a car loan make sure that you check with the lender what their policy is regarding early repayment.
Debt Consolidation to pay back all your small debts
While debt consolidation does not necessarily mean that you are paying back your loans faster, one cannot argue the benefits of debt consolidation; it offers you a higher disposable income and simplifies debt repayment, as you only have one lender to repay. Debt consolidation does not necessarily mean that you will pay back your debt faster but you can save on interest payment and service fees by negotiating on loan payment at a lower interest rate and only paying one service fee a month.
What’s more, is that it minimises your chances of defaulting on any debt repayments.
As a general guideline, it is recommended that you undergo debt consolidation if you are unable to manage your disposable income due to high debt costs. Additionally, should you owe more in debt than half your disposable income or if you are unable to repay your debt within five years, debt consolidation might be the best option for you.
All you need to know is how to consolidate your debt with the aim of reaching financial freedom.
So, how do you consolidate your debt, and how to do so for good? By following a simple guide for debt consolidation loan approval you can easily enjoy loan approval. And start the process of becoming debt-free while improving your immediate financial situation.
It is important to make sure that you are aware of all of the fees that you will incur during the term of any loan that you take out. It is also vital that you discuss early repayment structures and fees with the lender before you accept the loan agreement. Once you have signed and been paid the money it will be too late.
If you ever have any extra disposable income consider putting it towards your loans. Try to pay off the smaller loans first. This way you will free up some of your salary for some more luxuries or to help you pay off your bigger loans. Would a debt-free life not be wonderful?!