Having a huge amount left to pay to the bank on a loan can be quite the burden sometimes. Be it credit card loans, home loans or auto loans, most loan borrowers only have one goal and that is to quickly pay off your loans early and be debt-free within a few decades. But, don’t fret, we have put together a few tips and tricks that can help you to clear your loans faster and put you on your way to financial freedom.
#1 Make An Extra Payment
Making an extra payment every time you make your monthly loan payments cuts your loan interest time and duration in half. This way, you not only pay less interest to the bank, but you also will be debt-free in just half the time of your loan tenure.
#2 Round Off Payments
Say you have to make a payment of $245.25 per month for your car loan, round that up to $300 per month and paying the rounded off amount continuously would lead you to making three extra monthly payments a year!
#3 Search For Discounts
That’s right! Even loans have some form of discounts. For student loans, they may have schemes that offer you a discount when you make a one-off payment to settle your entire student debt. For other loans, there may be options to get a reduction of interest rates when you opt for paperless or digital statements for your loans.
#4 Take A Second Job
The most efficient way to make more payments on your loans is by having a second source of income. Try baby-sitting or driving an Uber after your day job to get a bit more money to put towards paying off your loans.
#5 Make Some Extra Cash
Do you have unused books, electrical good and home items lying around? Sell them on Amazon and E-bay. One man’s trash can be another man’s treasure so you’d definitely be getting some offers on your second-hand stuff in no time.
#6 Adjust Your Repayment Style
If you’re used to making the monthly payment for your loan, try switching it to make bi-weekly payments. Not only are you making smaller payments every two weeks, but you’d also be gaining less interest as your payments are being applied more frequently.
#7 Refinance Your Loan
Take out another loan, usually a personal loan, with a much lower interest rate, to finance a current loan with a higher interest rate. This works best on home loans, which have a huge interest rate and also car loans, granted that you do not have too many payment commitments at the time.
#8 Use A Bare Minimum Budget
Make a few small changes to your lifestyle and start living by spending on only the bare necessities. Replace groceries with the cheaper versions, like cereals, milk, spreads and even toilet paper. You’d be surprised at how much you’ve saved just from cutting out a few bucks here and there.
Paying off your loans early can be quite the struggle, but that does not mean that you cannot find ways to clear your loans off in the soonest. Make small changes to your everyday lifestyle and that itself would be able to help you save quite a bit that you can use towards paying off your loans. Getting a side hustle may not be everyone’s cup of tea, but simple jobs that you can do from home should do the trick to help you pay off those loans in the shortest amount of time.