Personal loans can help you when you need a little cash to cover expenses, but often, the interest charged on these loans causes the debt to grow. Though such debt can quickly escalate to cause financial hardship, structured prepayments can help easily avoid them. With a little foresight, settling your debt fast can help you save significant sums of money. Let’s look at how you can pay off your loan early.
Pay Extra When You Can
The easiest way to settle a personal loan early is to pay your lenders an extra amount whenever you can afford to. With a little discipline, you can direct that little extra income from work or side hustle towards reducing your debt. It helps to add a note along with your extra payments to indicate that the additional payment is towards reducing the principal amount.
Make Additional Payments Annually
A tax rebate or a bonus from work could help you make an extra monthly payment towards reducing your loan amount each year. If large funds are hard to come by, you could consider splitting the extra month’s payment over a year.
Consider Biweekly Payments
When you choose to pay every two weeks instead of monthly, you will tend not to notice a little extra expenditure. Repaying on a biweekly schedule can help you to make a few additional payments over a year while helping ease the stress of returning a large corpus of funds in one go.
Speak With Your Lender
Call your lender and share your interest in repaying your debt quickly. Lenders often offer their clients several options to prepay or settle loans early. While some of these programs also include prepayment fees, paying a small one-time fee could help you save more significant amounts over time.
Explore Debt Payoff Programs
Several companies offer debt payoff programs and systems to help you pay off loans early in exchange for a fee. Consider if paying the fee for such systems is worth the saving you will achieve from paying off your loan faster.
Paying off a loan quicker can not only offer you peace of mind by allowing you to be debt-free but also helps you save by paying less in interest.