Monitor a payout schedule
The first step is to draw up a payment schedule and try to adhere to it as much as possible. Do a detailed analysis of your income and expenses.
- It even makes sense to record the results monthly;
- Download an app for calculating income and expenses.
Any of the above options will show when you can reduce spending in order to spend this money more profitably, namely, on the loan repayment. Try to avoid cases of delay in loan payments. Missing payments spoils your credit history, this can adversely affect the possibility of refinancing and issuing loans in the future.
Pay 10% more
Early repayment of the loan really helps to save on overpayments. It is not worth saving up for early repayment in order to repay the loan at once. Better to add a small amount to your payment every month.
Build up an insurance reserve
The insurance reserve is money for an unforeseen event. It is impossible to predict what may happen in the near future – job loss, disease and other force majeure circumstances.
In order not to miss subsequent loan payments, you must have an safety net. To do this, you can even purchase a piggy bank and add a certain amount to it every month.
- It is better to set money aside into such a reserve when getting a salary, and not at the end of the month;
- A regular contribution, even if a small amount (about 10% of the salary), to such a piggy bank, will help to collect a fairly significant amount over time;
- The insurance reserve should contain 3-6 salaries;
- The insurance reserve will help you out in cases of temporary financial difficulties.
Pay on time
In no case do not allow missing payments on loans, so that the amount of the monthly payment is not subject to penalties. Always calculate your deposit in advance.
Each loan has a date until which a minimum payment must be made. Otherwise, a commission will be charged on this amount, and you will have to pay more than usual for the current month.
To avoid this, you must not only remember the date by which you need to make the payment, but also prepare finances for the payment.
We also recommend setting a reminder on your smartphone or making an entry in the calendar about the required payment.
In many organizations, you can choose the date of payment yourself: choose a date approximately 7-10 days after your usual payroll. Thus, you will be able to transfer the debt immediately after getting your salary and will not be late in payment.
Pay off loans in turns
If you have several loans, then pay off the debts on all loans according to the schedule and focus as much as possible on one loan.
At the same time, begin to repay the loan, the interest on which is higher. Repayment of such loans will help minimize the amount of overpayments, and use the saved money to pay off other debts.
In addition, some banks and organizations offer the opportunity to reduce the monthly payment by extending the loan over a longer period. It is better to take advantage of this opportunity, put the saved money on early repayment.
Find new sources of income
If you want to pay off loans faster, then you should take care of increasing your own earnings or find a part-time job that will be fully focused on the purpose of repaying loans. Do you have a skill that can generate income?
You can also sell unnecessary items. Conduct an audit – they can buy anything from you – from an old washing machine to a baby stroller. What has been gathering dust on the balcony for years can bring you additional funds.
Remove currency risk
If your loan is in dollars or in another foreign currency, ask the financial institution to convert the loan into local currency. This will avoid unnecessary losses during exchange rate fluctuations.
Use refinancing options
If another financial institution has more favorable credit terms, then you can transfer your loan there. Alternatively, you can try refinancing your loan with a current financial institution.
- This is possible when the average market conditions change, for example, if the average mortgage interest rate has dropped significantly over the past few years, and you pay the same percentage;
- At the same time, the loan amount will remain the same, you will simply pay it off longer, this will allow you to have more free funds that need to be spent on early loan repayment;
- Some banks are ready to give you one loan instead of several – this is one of the functions of refinancing. Thus, instead of several loans, you pay off one on more favorable terms.
You will need to calculate everything for this – for example, the size of the refinancing commission and the final loan cost.
- On the one hand, it is very convenient to pay off one loan than several in different organizations;
- On the other hand, it is worth making sure that the monthly payments for refinancing will not exceed the total amount of your payments before refinancing.
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