Becky employed various strategies to pay off her personal loan quickly. One was using the debt avalanche method, which involves prioritizing accounts or loans with higher interest rates as she made payments on them.
Other strategies could include making additional payments or breaking them up into biweekly payments to save interest costs and save you money in interest payments.
Regardless of the method, making extra payments is a fast and easy way to obtain funding even if you have a bad credit. Paying off one’s loans and credit cards on time and not missing payments can also improve an individual’s credit score and their chances of obtaining other forms of credit.
- Consolidate Your Debt
If you have multiple debts, resolving them quickly could help lower interest charges and save on consolidation costs. But before taking this route, it is essential that you fully comprehend how this works and the steps involved.
Debt consolidation involves consolidating multiple debts into one affordable monthly payment with a lower interest rate. This may be accomplished using credit card balance transfers, debt management plans, home equity loans or new personal loans with reduced rates of interest.
No matter which debt consolidation method you employ, it is crucial to remember that debt consolidation won’t solve all your spending habits; for faster debt relief it would also be wiser to reduce expenses and generate extra income streams.
- Make Extra Payments
Tax refunds or work bonuses can help lower the overall interest of your personal loan by using any extra money that’s left over from budgeting to pay it down, rather than spending it on luxury items or saving for retirement.
Alternate between making one payment each month and two payments monthly to shorten your personal loan’s repayment timeline by several months or years – just remember that some lenders may charge a prepayment penalty! Before making any adjustments to your payment schedule.
- Break Up Your Payments
Even if you’re trying to repay a loan, there are ways to speed up the process and decrease how long it takes you. One such strategy would be increasing monthly payments by even just a small amount.
Requesting a longer repayment term from your lender could save money overall by decreasing interest payments overall. Although extending repayment will increase monthly payments initially, it could help save costs overall by paying less interest overall.
Windfalls or extra income can also help you reduce your loan balance, such as cash gifts from family or friends, tax refunds, wage bonuses and side gigs such as pet walking or driving for ride-hailing services.
- Make a Principal-Only Payment
One effective strategy for swiftly eliminating debt is making principal-only payments, which only reduce the loan balance without applying interest charges to it. Principal-only payments may prove particularly effective in helping reduce high-interest credit card debt quickly.
However, not all lenders provide this option and it’s essential that any principal-only payments made are applied correctly – this could involve simply checking your statement after making each payment to ensure most of it went towards paying down debt.
Borrowers can make principal-only payments at their bank, online, or over the phone; additionally, it’s possible to set up automatic principal-only payments every month.
- Make Biweekly Payments
Many lenders allow you to make biweekly loan payments, cutting the length of time it takes you to repay almost in half and saving significant interest charges. But in order to take advantage of this option, additional income needs to be available – this might mean finding ways to save from gifts, work bonuses or tax refunds, or finding additional side jobs like dog walking or tutoring children.
If your lender doesn’t charge prepayment penalties, a free online calculator can help you calculate how much of each biweekly loan payment would be affordable each month if divided. But be wary: some third-party payment processing services charge up to $400 extra just for shifting payments! Be wary of them!