Having loans is never fun. They are a constant source of stress; what’s worse, if we borrow money from those near to us, the loans cause a constant strain in the relationship. Whenever we have a loan, we’d do well to pay it off as soon as possible; otherwise, more grievance can follow from our unresolved financial difficulties.
This article will present to you some of the most helpful hints at how to repay a loan that you already have, and to provide you with some safety measures for the loans that you may have in future.
1) Borrow from friends and family. Now, this may seem like a poor option because it involves financial aspects to otherwise personal relationships, but friends and family generally don’t charge interest, and they may be more understanding of your financial situation. You will save money on the interest of your original loan.
2) Refinancing your loan. If you don’t want to bring your family and friends into your loan (or they refuse that happening), refinancing your loan is the best option – simply find a loan with a better interest rate than the original loan and start from there.
3) Avoid more debt. This seems like an apparent advice to give, but it needs to repeated for one simple reason: you will be tempted to take another loan to finance your current one. Now, this is a great strategy if the new loan has lower interest rates (see advice above), but if the new debt has same (or, God forbid, worse) interest rate than the old one, you’re heading fast towards financial ruin. It may seem like a quick solution, but like all quick solutions, it is disastrous.
4) Rounding up your payments. This is a neat strategy for you to pay off your loan a bit more without actually noticing it. For example, if your rate is £852, you can round it up to £900 – this will reduce your loan for those £50, and it really adds up over time.
5) Rank interest rates. This really only applies to people who have multiple debts; if you fall into this category, you’d do well to pay off your debts as ranked by their interest rates. Clearly, the biggest interest rates should be paid off first.
6) Lowering interest rates. If you have a credit card debt, you can usually do a balance transfer, i.e. transferring your credit card to another bank. Now, where this option truly shines is that the new bank will lower the interest rates for you to snatch a client from a competitive bank. This is probably a good option to get a good monetary fix. After the debt is repaid, you can safely return to your old bank. It’s a win-win.
7) Budget. Many people do not budget their income and expenses, and end up in debt. Even if you think you’re fairly good with your finances, you should make a detailed list of how much you earn, how much you plan to spend and how much do you actually spend. The primary strategy here is to see where you can cut corners to save money.
8) Create a payment schedule. Paying of debt is a lot of like creating savings – if you put into your savings accounts the money you have at the end of the month, the odds are that you won’t put in much – or at all. However, if you make your savings primary and invest in it at the beginning of the month, you will have a sizeable amount of savings in a couple of years. Guess what? The exact same principle applies to debts. Simply pay off your debts first and live off what’s left, not vice versa; you won’t get very far.
9) Sell stuff. Now, this isn’t the most popular option there is, but it is a really good one if you think about it. Check all the stuff you own, and more often than not, you’ll find that you’re literally drowning in the things you don’t need. Try to sell them off at eBay or Amazon – the money will eventually pile up and you’ll be able to pay off your loan faster. Also, there is an added bonus of reduced stress – all the clutter that we own tends to accumulate background stress without us even realizing it. That is why the modern simple living movement is in full swing.
We hope that this article helped you out with your debts and has given you some sort of good ideas to improve your financial standing further. Remember – no financial situation is beyond repair. The sole question is that of personal integrity, willpower and desire to finally resolve the issue. Once the matter has been resolved, there can be no price for the peace of mind you’ll achieve.