How to Repay Loan Quickly: 7 Fastest Methods
Being in financial debt can be frustrating and damaging to your credit score. While borrowing a payday loan may have helped in the heat of the moment, you’ll need to find a way to repay the loan quickly. The faster that you repay a loan, the better you will feel and the less you will pay in interest. By only paying the minimum payments, you will find that you end up paying a great deal more than you have to over time.
Even understanding this, you might find that you are unable to make a significant dent in your debts. You may also be limited as to how much you can pay off your debt without paying a penalty. There are a few ways that you can speed up the process and repay the loan quickly.
Here is a guide on how to repay a loan quickly and become debt-free as fast as possible:
1. Increase the frequency of your payments
Paying monthly could be one of the best ways on how to repay a loan quickly. From a budgeting point of view, you can trim down the interest that you pay by increasing the frequency of your payments to twice a month.
Make sure that you speak to your lender before starting this payment structure so that you make sure that you are maintaining the minimum payment schedule and not in conflict with the terms of the loan agreement.
2. Round up the loan payments
Your minimum loan payment amount will probably be a specific amount down to the cents. If you were to round up the payment to the nearest ten, fifty, or even hundred you may not notice the additional amount in your monthly budget, but it will have a very positive effect on the speed at which you are able to pay off the loan.
For example, if your loan payment is $178.28 each month, maybe consider increasing it to an even $200. As with any changes to your payment schedule, you should always make sure that you have spoken with your lender beforehand. This can be a great way to repay a loan quickly and shave months off the length of the loan.
3. Examine your budget
When you look at your monthly budget, you probably only have large expenses listed out. These will include your mortgage/rent, car payments, gas, and a few others. These are hard costs that are really hard to reduce.
An often-overlooked opportunity for reducing monthly expenses is the little things. These include daily coffees, lunches and other small items that might seem like small expenses each day, but they all add up to hundreds of dollars each month. If you cut enough expenses, you may have enough money to repay the loan quickly.
4. Look into refinancing
This can be a great way to lower your monthly payment and reduce your interest rate in one stroke. Provided that you have good credit you will be able to apply for a line of credit or other financial products that will allow you to refinance one or more sources of debt and clean up your credit profile with ease.
This can be really helpful for your own state of mind too. One easy and affordable low-interest monthly payment can also help to improve your credit score as well. Make sure that you speak with an expert who and take the time to do the math so that you are getting a better deal on your interest payments. The last thing that you want to do is to refinance and be stuck with a larger monthly payment and higher interest.
5. Leverage your home equity
If you have untapped equity in your home you can access this using a home equity line of credit. This is a form of refinancing, but it will offer you a low-interest rate and allow you to take any high-interest debts like credit cards and pay them off completely.
Many lenders will allow you to take up to 80% of your home’s appraised value this way and it can be a great way to tap into the money that you have invested in your home. Make sure that you are sure that you a dealing with a reputable lender when looking at any type of home equity line of credits.
As you are putting your home up for this source of funds, you need to make sure that you fully understand the terms and conditions of the line of credit.
6. Work together to repay the loan
If you and your partner pool your resources and attack your debts as a team you might find that you can pay off higher interest loans much faster and move on to lower interest debts later.
This strategy can work wonders in repaying a loan quickly. Instead of money being a touchy subject in a relationship, you can make it into a source of strength.
7. Choose one debt and repay it with all you have
You still need to make sure that you fulfill all of the monthly minimum payments to each lender that you owe money to, although focusing on one debt at a time is the best strategy.
Repaying a loan quickly allows you a sense of closure and keeps you motivated towards your goal of being debt-free.
