Managing your personal finances can be a challenge. It's not uncommon to run into unexpected financial emergencies which you might not be able to meet with your cash on hand. When this happens, you might want to consider applying for a personal installment loan to help meet your needs.
Perhaps the most important thing about a loan, once you have it, is how to pay it back. Installment loans can be easy on the budget. Here are five tips for paying back personal installment loans.
Use these tips to quickly pay off your personal loans.
- Double Your Payments
Submit payments to your lender more frequently than they require for your installment loan. For example, if your personal loan requires monthly payments, you can give them a payment every two weeks. If bi-weekly payments are required, pay them weekly. Before you begin doing this, confirm with your lender how payments will be applied to your loan and confirm that you won't be penalized for any loan prepayments.
- Round Up Your Payments
Another method to pay back personal loans quickly is to add some money to each payment. Perhaps the easiest way to do this is to round up your payments.
For example, if your installment loan payment is $262.15, round up the payments that you make to an even $300, which is an extra $37.85 per payment. This equates to an additional $454.20 over the course of a year.
The rounding up approach may not reduce your future monthly payments, but it will pay off the loan sooner.
- Earn Extra Cash
If you're anxious to pay off a personal loan, consider finding some ways to earn extra cash to dedicate specifically toward your loan payments. You can see if there are items that you can sell online, or consider a short-term, part-time job. As you accumulate the additional income, send it straight to your loan company as an additional payment.
When you pay off your installment loans fast, you'll have more money each month to save.
- Make One or Two Extra Payments
Even if you don't want to commit to doubling your personal loan payments or rounding up, you might consider making an extra payment when you have cash available. You might use a tax refund to pay on your loan.
Another way to make the equivalent of an extra payment is to take your payment amount and divide it by the number of payments in a year. Let's say that your payments are made monthly, you will take that monthly payment and divide it by 12. If you add that amount to each of your next 12 payments you will be making the equivalent of an additional payment over the course of a year.
- Ask About Paperless or Other Discounts
Some lenders provide Annual Percentage Rate (APR) discounts for a variety of reasons. You might be able to obtain a discount if you are a repeat customer, if you sign up for automatic debits against your checking account, or if you agree to paperless statements.
Some of these tips may not even adversely impact your weekly or monthly budget. Making an extra effort to pay, however, will help you eliminate that loan from your debt list quicker. Being debt-free is a noble goal. Paying off your personal loans can help you get there.