When you’re paying your debts on time, you can save a lot of money. This is where you will get some inspiration to get rid of your loans. So focus clearly on eliminating debt & getting your finances on track.
Let’s understand a few ways to get clear off your debts to keep calculated. Whichever way you choose, ensure to make early paybacks & stick to your regular lenders. You may have to make a pre-payment or walk a specific path to sort out things properly.
What is the use of paying off loans early?
If not always, paying off debts early can be great for your financial health. This is so if you don’t have any suitable solution. Carefully go through the positives and negatives to take a valid decision. The good points could be paying low interests & savings more for future financial goals. Build up a reasonable emergency fund to make sure you have enough in times of exigencies. This will stablish your immediate spending & income stream. Let’s say your interest rates are dipped so low that you do not have to think about pre-payments. However, if you’re habitual of being debt-free then get off the burden.
Take up a fair estimate of what numbers to keep and how much can be effectively saved. This will keep you considerably motivated. Make use of a loan amortization calculator, which has a pre-built Excel loan calculator or calculate manually for further use.
1. Send Money
Keep paying off debt whenever you get little extra as income. This is the simplest way to keep your borrowings under control. This is certainly difficult because you need immense discipline for it. Or you can opt for an automatic mechanism to stay rigid on regular payouts.
If you like to live by the moment and have faith in paying off timely debts, then send extra payments. You can pay in cheque or cash to apply money to the principal amount. This way your lender will stay sure and connect with you in case of changes. Also keep a check to ensure your instructions are understood and followed.
The same concept applies to electronic payments equally.
2. One Extra Payment
You can pay off your debts quicker by adding one more payment to the full year. Let’s say if your monthly payment is Rs.12000, then pay an extra Rs3,000 anytime during the year. This money can be channelized from a tax refund or job annual bonus.
If you don’t think differently, then you’ll always find it difficult to spare an extra payment. You can spread out your extra payment over one a financial year. Divide the entire amount by 12 & make a monthly payment.
3. Pay Off Debt, Biweekly
There’s another way to make payments on a biweekly basis. This will be as good as making one extra payment in a financial year. And obviously when you’re making a biweekly payment, your overall expenses do not really change.
You’ll only experience an increase in your savings every month instead. This is true because a huge repayment is done which is inclusive of the amount of interest.
4. Programs to Pay Off Debt
Go to your lender to check up on repayment options available with them. You may be required to pay extra charges so stay alert & sound. If it’s worthwhile, then happily proceed & pay money.
If you don’t think the fees is reasonable, then try to find an alternative. You can also set up an automatic system to make payments straight through an online process.
Besides your lending company, other involved parties also expect a fee to run your debt payoff program. However, you don’t need their services if they cannot exercise financial discipline.