How Can You Pay Off Your Loan Early? Five Easy Steps!
If you have lately taken a large loan and carrying thousands of dollars in credit card debt, or taken a hefty mortgage in your name, you will want to pay off your loan quickly. It also means you are looking at paying off hundreds of dollars in interest payments over the lifespan of your loan.
Also, the worse part of loans is the load you feel and the fact that it will take years for you to pay off the loan. Although it may seem difficult at the onset, it may not always be the case. With a full-proof technique, you can pay off any kind of loan with ease and quickly. These techniques won’t impact your finances but they can lower the interest load to a great extent. Who does not want to be debt-free faster? You can save money and use it to buy the things you need and want, instead of using your hard-earned money to pay off the debts. Here are steps to pay off your payments easily.
Pay Off Bi-weekly
Instead of making lump-sum payments at the end of a month, try and make two weeks’ payments toward your loans every two weeks. With regular payment applications, you’ll have less interest to pay. So, you’ll make 26 half-payments every year, which will mean you’ll end up translating into an extra full payment on the year, thereby reducing the loan life by several months or even years. This way you can lower your thirty-year mortgage and bring it down to 26 years.
Shorten Your Loan Span
Make your monthly payments and bring them down to $50. If your loan amount comes to $220 each month, bring that amount to $250. The difference may be less enough to affect your budget, but again it is large to lower a few months of the loan and save you a great amount in interest. If you want to lower your interest further, reduce your payments to the nearest $100.
Making Extra Payments
If paying off bi-weekly seems difficult to you, try and make an extra payment each year and accomplish the goal as you commit just one extra payment a year. This way you’ll be able to pay off once a year and you’ll shorten the loan life by several months, or even by a few years. You can make it easier by including the bonus, tax refund, or another windfall to pay off the loan.
Also, you can make the extra payment to enable proper payment throughout the year. Divide the monthly payment by 12 and then add the monthly payments. You’ll make a full extra payment over the course of the year without feeling the pocket pinch.
Pay of the Loan for Refinancing
Refinancing is one of the best ways to pay off your loan. If the interest rates drop off and your credit improves you can wrap off your loan amount quickly.
If you want to pay off the loan sooner refinancing can help you fix things better. You can achieve this as you shorten the life of the loan, an option that will help you afford easily with a far lower interest rate. Keep the life of your loan unchanged and this will help lower the monthly payments to a great extent.
Boost your Income and Ensure You Put All Extra Money Toward the Loan
One way of cutting down the loan schedule is by earning more money as you try and make extra payments on your loan. The easy ways of doing that are by investing in Amazon or eBay, cut down on your sudden impulse purchases, and put your saved money toward your loan.
You can also invest in a side hustle on weekends or holidays for the extra money. Even a job that can fetch you $200 a month will make a big difference in your loan. When you direct that particular amount to pay off your loan amount, the paying off process will be much easier, and you will soon be loan-free.
Use one or more of these tricks to not only shorten the loan span but also pay off the loan with much lesser interest. You deserve to pay off your loan quickly and enjoy your life without constantly having to think about loans and how to reduce interest rates.
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