Each of us has probably been in a situation that we needed something and were not possible of getting it due to the lack of funds we had. Luckily, we were able to get a loan and obtain the desired item or service, some under better and some under less fortunate conditions, all depending on the chosen bank and loan length and certainly all of us with a desire to pay it off as quick as possible and become debt free again. Here is how to pay it off faster.
Bi weekly payments
As the name says, this kind of payment means that you will be submitting payments every two weeks, instead of once a month. Naturally, this does not mean that you will double the amounts you pay, you will double the frequency of payments. There are three benefits that come from this kind of loan payments. First, you will end up having one monthly payment a year more since there are 52 weeks in a year or 26 bi-weekly payments. Second, due to higher payment frequency you will end up paying less interest and thirdly, you will shorten the loan period a month per year.
Make extra money
This may seem like a useless advice at first. Naturally, if there was extra money no one would take loans in the first place. Still, there is often extra money lying around without even being noticed. There must be at least a dozen of items in every household that are not used anymore. Selling them will bring extra money and enable additional payments and further shorten the payoff period. There are plenty of other ways for making extra money, you just need to be creative and find one or more which will suit you best.
Once extra money was gained by selling obsolete things, it can be used to round up the payments. For example, if your monthly or bi weekly rate is 165$ round it up to 200$. This may not seem like a big deal, but it will bring two additional monthly or four bi-weekly ones at the end of each year. Naturally, if you are in a position to make a larger round up, by all means do it, the faster you pay off your loan the less money you will spend.
Additional large payments
If there is a possibility, make a large extra payment once a year, or at least once during the entire loan period. Why is this so important? Not only will it shorten the loan period, but it will bring additional savings by reducing the interest rate you will normally pay. Less rates means less interest, which in return sums up to less money being spent all round. Company bonuses or tax refunds, for example, could be used to make these additional large payments.
Hopefully, these suggestions will enable you to shorten your loan period and help you save money along the way. Obviously, it will take a lot of financial discipline in order to make it happen. However, nothing compares to being debt free again and bear that in mind whenever the going gets tough.