Like it or not, most of the people out there cannot go about without having to take at least one loan during their lifetime. It may be their student loan, their mortgage or even their small personal loan – it does not matter, they are all loans. And, ultimately, they all have to be repaid.
One of the major issues with loaning and lending money in this world is that a lot of people put off their repayments by as much as they can. In truth, although such a move can give you a bit more time now, it can ruin your finances for the future and it can bring you on the brink of collapse. Still, how does one pay off their loans quicker than the maturity date? Here are some of the tips you may find useful:
1. Face your debt. If you keep running from it, your debt will grow exponentially with the number of months you’ve avoided facing it. Debt can be like a bad past relationship: if you don’t close it down once and for all, it will follow you for the rest of your life. So, with that being said, sit down and think well. Think of how much you have to pay back and think of when you want to pay it back. Whether your debt is a car loan or a mortgage, you need to be realistic about how much you owe and how you’re planning to pay it back.
2. Read the repayment guidelines. You need to do this because it will tell you exactly what your lender expects from you: which are the minimum payments, which are the maximum ones, if you can pay off the loan quicker, and so on.
3. Make a plan. You can’t do this if you don’t have a thoroughly thought out plan – and if you don’t stick to it. If you set your mind on having to pay 3 times more than the minimum payment, then do it! The only time when you are allowed to get off track with your plans is when you have more money and you want to make even more payments than you have initially thought of. This way, you will surprise yourself by paying off the loan entirely before you even notice it.
4. Don’t be afraid of the fact that you will have to make sacrifices. Yes, you may not be able to afford that Belize holiday and you may not be able to afford touring through Europe. You may not be able to afford paying for a phone plan that is a couple of hundreds of dollars every month and you may not be able to afford buying a new phone every time a new model comes out. But the good news is that by the end of this period, you will be debt-free – and you’ll afford paying for everything you want.
5. Pay attention to how you use your credit card. Responsible use of these cards can definitely push your credit card further, but make sure you make full payments at the end of each month. Otherwise, you’ll be followed by your credit card’s interest rates – which can definitely bring you down.