Save money on the total interest you’ll pay over the life of your loans.
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Top 4 Ways to Pay a Loan Off Early
Top 4 Tips for Early Payoff
If you’re like most Americans, you owe money on a large loan. Whether that’s credit card debt, a mortgage and/or a car loan, loan debt is part of your life. And that means you’re typically looking at hundreds of dollars in interest over the life of the loan, plus the mental load of knowing you’ll be paying on the debt for years to come.
Did you know there are simple tricks you can employ to lighten the load? With a carefully applied technique, you can pay off your mortgage, auto loan, credit card debt or any other debt you’re carrying sooner than you may have thought possible.
These tricks are light on your finances, but they can make a big impact in the total interest you’ll pay over the life of the loan and get you debt-free faster.
1. Make bi-weekly payments
Instead of making monthly payments on a loan, do half-payments every two weeks. This way, your payments will be applied more often so less interest can accrue. You’ll also be making 26 half-payments each year, which translates into an annual extra full payment, shortening the life of the loan.
2. Round up your payments
Round up your monthly payments to the nearest $50 to shorten your loan. The difference is usually too small to make a tangible dent in your budget, but large enough to knock a few months off the life of the loan and save significantly in interest.
3. Make one extra payment each year
If you can’t make bi-weekly payments, but you like the idea of an extra yearly payment, accomplish the same goal by committing to just one more payment in the year. You’ll only feel the squeeze once (tax or bonus time, perhaps) and you’ll still shorten the life of the loan.
You can also spread that extra payment throughout the year. Divide your monthly payment by 12 and then add that cost to your payments all year long. You’ll be making an extra payment while hardly feeling the pinch.
4. Refinance
If interest rates have dropped since you took out your loan or your credit has improved dramatically, contact us to ask about refinancing, whether the loan is with us or not. Refinancing makes the most sense if it can help you pay down the loan sooner. With a lower interest rate, you should easily be able to afford shortening the life of the loan.
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