5 Ways To Pay Off A Loan Faster
As we begin a new decade, we hope that all of our members are pledging to take on their financial debt with renewed resolve. No matter what type of loans you’ll be tackling this year – student, auto, home or any other – it may seem like an uphill battle. Progress on your repayment can seem slower than you’d like, so if the road ahead seems daunting, here are a few ideas to help you pay that loan debt off more quickly, this year and beyond.
- Schedule Automatic Transfer of Funds
The most important step to eliminating loan debt is to remember to make your payments. But instead of keeping that item on every month’s to-do list, you can probably just schedule an automatic payments with your lender. If your loan is with Fairmont Federal Credit Union, you can contact one of our representatives today to schedule automatic payments from checking or savings at no extra cost.
As you’ll see, setting up autopay is also very helpful for most of the rest of our tips. If you’re not making automatic payments yet, get set up with your lender today.
- Round Up Your Payments
This is an extremely simple way to make your payments count for more. For example, if your minimum monthly payments are $187, just round them up to $200. You probably won’t notice the extra $13 each month, but with that simple adjustment you’ll pay down an extra $156 on the principle each year. (It also makes for nice, even numbers while budgeting.)
- Make Payments Bi-Weekly
Some lenders will allow you more flexibility than the typical once-a-month payment plan. If yours is one of them, try scheduling half-payments every two weeks (instead of full payments once a month). This simple adjustment alone will decrease your loan by a full payment every year. Paying bi-weekly results in 26 half-payments (equal to 13 full payments), as opposed to the 12 you would have made with a monthly payment plan.
Fairmont FCU will allow this option on simple interest loans such as auto or personal loans. It’s a great practice to get started, make a ½ payment as soon as you get paid and continue with each pay thereafter.
- Dedicate Extra Paychecks
If your lender doesn’t allow bi-weekly payments, no problem. Most American workers are paid bi-weekly, and if you’re one of them, there’s an easy way to pay your loan down faster without messing with your monthly budget.
During two months each year, many workers who are paid bi-weekly will get a third paycheck. Dedicate one (or both!) of those to paying down your loan. That should make a significant dent in your balance each year, and keep you from paying any more interest than you have to.
- Dedicate Your Tax Refund
This option is self-explanatory, but it’s a great, simple way to pay that loan off more quickly! Once you get your tax refund back, simply apply that amount to your loan as an extra payment.