Did you know that personal loans hit a record high of $120 billion?
With so many personal loans being taken out it’s no surprise that some people are trying to get out of that debt as fast as possible. Usually, the quicker that you pay off a personal loan, the less interest you pay.
Learn 4 tips for paying off a personal loan early below.
Tips for Paying off a Personal Loan Early
Whether you already have a personal loan you’re paying back or you’re looking into taking out a personal loan in the near future, the following tips will come in handy. Even if you don’t have good credit, you can check out these options to find the best personal loan for you.
Paying off a personal loan early will save you from paying extra interest. Before following the tips below, double-check with your lender and ensure that you won’t be charged a penalty for paying your loan off early. This isn’t normally the case but you always want to double-check.
1. Roundup Your Payments
Whatever your monthly payment is round it up to the nearest amount of either $50, $100, or $150. If your monthly payment is $32 per month round it up to $50. The extra payment will be applied to your principal.
The more you pay toward your principal balance the faster you will pay off your loan.
2. Pay Biweekly
Instead of paying once per month pay, your loan company every other week. Send in the amount your monthly bill is each time.
Doubling your payments will knock out that debt before you know it. Because you’re not paying double the amount in one payment, it won’t feel like a huge payment each time.
3. Refinance Options
You might find that refinancing is a good option for your situation. Sometimes you’re able to find a better interest rate because you have been paying your loan off on time. If you’re interested in refinancing your home, you have choices. One option would be to refinance and get cash out. Another option would be to take out a home equity line of credit (HELOC).
If you find a lender that offers 0% interest for 12 months, then it would be a great idea to use that loan to pay off the previous personal loan. Then calculate how much you should pay per month in order to have the loan paid back within those 12 months. This will leave you with paying no interest.
4. Put Away Your Change
There are apps or bank accounts that will round up what you spend to the nearest dollar. You’d be surprised how quickly this change adds up.
Normally the amounts are so small that you won’t even notice but before you know it you have a nice chunk of savings on the side. Every time you reach a certain amount you can send it in as an extra payment towards your personal loan.
Happy Early Payoff!
There you have it; 4 tips for paying off a personal loan early. Now it’s time to apply what you learned and get rid of your personal loan as soon as possible to save some money.
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