The following post is a guest blog post from one of our good friends and he offers a unique-alternative to paying off your loans faster! We don’t traditionally have these, but we always enjoy reading a different perspective and other avenues to take to become Financially Free! Please see the post below and we thought it could be for something of consideration:
Time to Pay off Your Loan Faster
Borrowers are bound to feel relieved once they pay off their entire loan. By paying the loan amount back, you can enhance your savings. You’re bound to meet a higher rate of interest when you owe a higher amount of loan to your bank. For instance, the burden of your monthly loan may get lowered when you opt for a long-term agreement.
Consider the Following Ways to Pay off Loans and Improve Your Finances:
Opt for a lower rate of interest
Consider transferring your loan with another lender that offers a lower rate. However, you must take a prudent decision when it comes to improving your financial situation. You might have to bear exit charges while picking another lender over your current one. Also, you mustn’t take the plunge for another lender if he offers a short-term lower rate. Opting for such offers might prove to be more expensive in the future. Refinancing can be avoided when you achieve a better deal from a new lender. The new lender might even provide you with the customized offer when the whole new deal doesn’t fit in with your requirement.
Increase your income beyond the amount you pay for equated monthly installments (EMIs)
You may consider certain investment options that yield more returns in terms of interests as compared to the amount that you pay towards meeting your loan installments. It will even save you from spending much on your quick loans. Accumulate funds to consider various investment options that yield higher returns. You may even get in touch with a financial expert while considering your hand-picked options.
Don’t change your repayment pattern even when the interest rate falls
You must follow the same repayment pattern if your minimum repayment towards the loan falls due to a falling rate. You’ll certainly be able to pay off your loans much faster than meeting a higher repayment amount caused by declining rates of lending. In doing so, you won’t have to accumulate extra funds for pre-paying your loans. Also, you won’t feel any pinch in the pocket as you’ve been a similar amount all the while.
Contribute more towards installments after getting a promotion
You may contribute more towards your loan installments after you achieve an increment or bonus. This is your opportunity to run out of debt. Whenever it becomes possible for you to make repayments worth higher amounts, you must focus on pulling yourself out of debt. Extra repayments will help in lowering the cost of loan interest and the period of time.
Consider an offset account
Your home loan is often linked to a transaction account known as the Offset Account. The amount owed on your home loan can be paid off easily when you have funds in this offset account. This is the main purpose of creating this account. By the end of the day, interest is charged on the difference of the account balance. Higher the balance you have in your offset account, lower is the rate of interest that you ought to bear on your home loan. However, you need to inquire about the interest you ought to pay for an offset account in advance and set up a payment plan accordingly.
Paying off your loan often seems to be an uphill task, but with a little bit of planning, you can fulfill repaying the entire borrowed amount within a real short span of time.