Tips On Paying Down Your Loans Faster
As you commit to experiencing more financial freedom, it is important to educate yourself on personal finance issues. Learning how to create more income and reduce expenses will help you to experience less stress and more freedom.
If you have loans, which most of the population does, it is worth your while to learn how you can pay down your loans faster than you have been. Whether those loans are mortgages, auto loans, student loans, loans for bad credit or credit card loans, a little bit of knowledge will go a long way.
Here are some tips on how you can pay down any loan faster than what you have been.
If you send half of the amount of your monthly loan payment twice a month, you will be paying down your loan faster. In doing so, you will be paying less interest and by the end of the year you will have made one extra payment, which over time will shorten the amount of length you must pay on your loan. Go ahead and pay on the 1st and 15th if that schedule works for you.
Create more money
Many people have paid off loans sooner by selling things that they don’t need anymore or taking on a second job for a season. Take the extra money that you make and pay it on your loan. The extra monthly amount could save months, a year, or several years off your loan. Even a small amount like $50 per month is wise to put down on your loan payment.
If you round up your monthly payments, you will end up paying off your loan faster. For example, if your monthly car payment is $255, go ahead and round it up to $300. That way you are paying an extra $45 per month and by the end of the year you will have paid $540 extra dollars, which equals more than two additional payments. If you can afford more than the round up, by all means add it to your payment. The more the better and the faster your loan will be paid off.
If you refinance your loan, you will save interest and lower your monthly payment. Over time it will save you a lot of money. Go to your local bank and discuss with them their refinance rates and see if you qualify to refinance. Right now there are plenty of low interest rates in both the mortgage and auto loan industry.
One extra monthly payment
Even if you just make one extra payment per year on your loan, you will shorten your loan and the amount of interest paid. A great time to commit to doing this is when you get your tax refund or yearly bonus. It might not seem like a lot, but over the years the benefits are well worth the extra payment.
Pay now, play later
There is a saying that I’ve heard about finances: “Pay now, play later”. This means that if you do the hard work now and pay off your loans as soon as you can, you will have plenty of freedom to play later. If you slack off on your payments or keep racking up debt, you may be having fun now, but the stress of a large amount of debt will wear on you and you will pay later financially and probably emotionally.
Commit to doing what you can to pay off your loans early and know that by doing so, you are freeing up your financial future and creating a life of ease and success.