Owing money on a mid-to-large-sized loan is relatively common these days. In fact, studies have shown that more than half of all Americans have taken out a decent-sized loan to which they still owe quite a bit of money. After all, especially in the 21st century, taking out a loan is almost a big part of being an adult. Whether you’ve taken out a home equity loan, student loans, or an auto loan, unless you’re a millionaire it is almost a necessity if you need to make big purchases or help get from one point to another, financially.
Paying off loans can sometimes take a long time and can definitely feel tedious as you make payments every month, especially when you consider the interest that builds up the longer you have that loan. However, it doesn’t have to be this way – there are simple tricks than can enable you to pay off your loans faster than you may not have considered before. As always, if you have questions about these tips, feel free to contact your lender or speak to one of our loan officers.
- Round up your monthly payments. If you’re looking for an easier way to shorten the length of your loan, round up your monthly payments to the nearest $50. As an example, if your monthly student loan payment comes out to $325 a month, pay $350 instead. That extra $25 won’t break you for the month, but incrementally, those rounded-up payments will meld into your monthly budget and you won’t know the difference – all you’ll see is your loan being paid off faster each month.
- Start making bi-weekly payments. Submitting two bi-weekly payments a month as opposed to one big monthly payment has its advantages. For one, there will be more payment activity on your account, allowing less interest to accrue, and we all know that interest can be a killer when it comes to completely paying off loans. Also, making 26 half-payments during the year translates into one extra payment in full on the year, which helps decrease the life of your loan by months, perhaps even years.
- Make an extra payment every year. This can be done aside from or in tandem with making bi-weekly payments; in fact, considering that making those bi-weekly payments contributes to an extra payment every year, this can only add to that. By committing to make an extra payment every year, whether you do it in one payment or your spread it out throughout the year, you’ll be taking months off what you owe.