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Tips for Repaying Your Loan

For people who got debts and want to be free from it for good, it is most likely that they have tried a number of different methods to repay it. The points below can be a big help if you wish to make your loan repayment less challenging.

Tip number 1. Make biweekly payments – it is a smart move of you to pay the loan every 2 weeks rather than making the payments every month. As you do so, it can actually help you achieve 3 things such as making an extra payment because 1 year has 52 weeks, doing this for the term of your loan can actually shave off months of your loan and it can lower your rate of interest because the payments are applied more frequently.

On the other hand, before you get to do this, you have to talk this one with your lender. The reason for this is that, there’s a possibility that you might be penalized for the extra payments you have made or have paid your balance earlier than what you expect.

Tip number 2. Round up your payments – an effective and at the same time, effortless way to pay extra from your loan without missing any funds is done by rounding your payments. Much like paying loans biweekly, you don’t need lots of funds to slash several months off the term of your loan. A simple example for this is if you have to make at least 289. 84 dollars auto payment monthly but chose to make 300 dollars as you have rounded it up, then it will give you an extra of 10.16 dollars every month or a total figure of 121.92 yearly. Automatically, this is lessened to your payments upon the last term of your loan.

If you like to take it up a notch, you can even add an extra 50 to 100 dollars a month. For sure, over that period, it adds a big amount to it letting you save interest while also shortening the term of the loan.

Tip number 3. Make one additional payment – you are still able to attain the same result by making an extra payment per year in case that you do not have the cash flow to be able to commit in making a biweekly payment. You can repay your loans faster by using cash from your work bonus or even tax refund. There is another way of doing this and it’s by dividing to 12 your monthly payments and add the quotient to the payments you are set to make for the rest of the months.

We can’t deny the fact that repaying your loan puts a huge strain on your budget but you can lighten up this burden by making yourself aware of the tips discussed.

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