There are more people taking out personal loans these days than ever before. According to recent reports, about 20 million Americans have taken out a personal loan over the past year and the average personal loan balance sits at right around $16,000.
If you have a personal loan hanging over your head—or any kind of loan really—you should know that there are lots of ways to pay off a loan quickly so that you don’t have to deal with it for a long time. As long as you’re willing to work hard at it, you can eliminate a loan from your life in no time.
Here are five great ways to pay off any loan faster.
1. Make Bi-Weekly Payments on Your Loan Instead of Weekly Ones
While you’re in the process of paying down a personal loan, the lender could ask you to make monthly payments on it. You’ll be told to make that payment by a specific date each month.
You’re welcome to stick to this repayment plan if you want. But you can also make bi-weekly payments to pay off your loan faster than you would otherwise.
Since bi-weekly payments will be paid more often than monthly ones, it’ll reduce the amount of interest you’re charged for your loan every month. It’ll also result in you making an extra loan payment each year without you even realising it.
2. Pay a Little More Than You Owe on Your Loan Every Month
Let’s say that you’re making a $255 payment on your loan each month. You can obviously pay your loan off faster by upping that amount to $300. But you don’t have to make that drastic of a move to decrease your loan balance faster than you are now.
You can up your monthly payments to just $275 or so and see a difference in how fast you’re able to pay it off. That extra $20 will go a long way towards bringing your loan balance back down to earth.
3. Find Ways to Bring in Extra Income Each Month to Pay Off Your Loan
If you’re extra motivated to pay off a loan fast, bringing in more income each month is the most logical way to do it. You can throw this income right at your loan balance and see it come down in a hurry.
You can make extra income while paying down a loan by:
- Picking up a second job
- Selling things you have sitting around your house that you don’t use anymore
- Creating a lucrative side hustle for yourself
You can do one or maybe even all of these things to increase your income and pay off your loan.
4. Refinance Your Loan to Get a Better Interest Rate
Do you have a high-interest rate attached to your loan that’s making it hard to pay off? You can get around this by refinancing your loan to get a better rate.
Look around to see if you might be able to take out a payoff loan to pay your current loan off. If you have decent credit, you might be surprised to see how much money you can save every month by refinancing your loan.
5. See If a Lender Will Offer a Loan Discount for Going Paperless
Every dollar counts when you’re trying to pay off a loan! So don’t be afraid to contact your lender to see if they offer any discounts to borrowers.
Some lenders have started to slash interest rates for those who agree to go paperless with their loans. By going paperless, you could make it so much easier to pay off a loan fast.
Start Paying Off Your Loan Faster From Now On
Once you pay off a loan, you’ll feel a sense of financial freedom you’ve never felt before. You’ll be amazed by how much better your future looks when you get out from under your loan.
Use the tips found here to begin to pay off a loan faster than you were before. You can bring your balance down to $0 by using them to your advantage.