In today’s economy, almost everyone has some sort of debt. This includes credit cards, student loans, business loans, mortgages, and medical debts. Luckily, most loans can be paid off in a similar way. Use these tips to pay off your loan faster without actually having to make larger loan payments.
1. Use a Debt Consolidation Loan
When a person has many different loans, they are likely to have loans with different interest rates. The loans will likely be from different groups as well. One way to combine several loans into one is to use a debt consolidation loan. These loans will combine the debt from several loans and put it into one. This means that a person only needs to make one payment instead of several. It also means that only one interest rate is used. If you have a good credit score, the interest rate used may even be lower than some of the rates on the loans from before they were combined.
To get a debt consolidation loan, you will most likely have to go through a third-party lending service, as not all banks and credit unions will have this service. If you are already using another third-party loan service, then try to go through them first. For example, if you use a MaxLend loan, go to your MaxLend login to look at the customer portal. From there, you should be able to look at your current loan amounts and interest rates. You can then try to chat with a loan officer to see if you qualify for a consolidation loan.
2. Pay High-Interest Debts First
If you cannot consolidate your loans, or if you simply do not want to, then your next best option is to pay off your highest interest rate loans first. This is still a good idea most of the time even if you have larger loan amounts with lower interest rates. This is because loan payments usually go toward paying off interest before they go towards paying off the principal. The longer you take to pay off a loan, the more money you are putting into interest. The larger the loan amount (with a high interest rate), the faster the loan will rack up more debt.
Paying off a high-interest debt first doesn’t mean ignoring your low-interest debt. Instead, it means focusing on paying the minimum payment on low-interest lows and putting more money into the higher interest rate loans. By doing this, you can more quickly pay off high-interest loans, which will save you more money in both the short term and long run. To figure out how long it will take you to pay off a loan, you can use a free online loan calculator.
Paying off a loan faster doesn’t always necessarily mean dumping all of your extra money on your debts. Sometimes it just means paying down loans in a smarter way. Use either or both of these tips to pay off your loans faster without spending more money than you need to.