Nearly 77% of households in the US have some form of debt. These debts range from home equity lines of credit, credit cards, and auto loans to student loans and mortgages. With most people not having any savings, loans can help you finance life’s big purchases like a home, car, college education, or even a home improvement project. You may also need to take out a loan if you’re faced with an unforeseen or emergency expense beyond what you can afford.
Thankfully, there are loans available for nearly everything you might want to purchase or finance. Even if you don’t qualify for a personal loan, you can get a payday loan with a reputable online lending company like My Canada Pay to cover utility bills or rent overdue. Typically, the faster you pay off your loans, the lesser the interest you pay. Otherwise, you may face a growing pile of debt, making it difficult to get out of debt. To avoid getting yourself deep into debt, here are a few tips to help you pay and eliminate debt faster:
1. Consolidate Your Loan Debt
One of the best ways to repay your debt faster when you have multiple loans is by consolidating them into a single loan. This makes repayment more manageable and easier to track your loan balance. That’s because combining multiple high-interest loans into one big loan allows you to get a lower interest rate, which you can pay down faster without increasing payment amounts. For instance, you can combine several high-interest credit card balances into a single lower-rate loan, reducing the total interest you’ll pay over the loan’s term.
2. Refinance Your Loans
Another great way to get rid of debt faster is by refinancing your loans. Like debt consolidation, refinancing gives you a lower interest rate on your loans, making it easier and more cost-effective to repay them. Refinancing works by shortening your repayment term, so you make higher monthly payments but lesser interest on the loan. With lower interest rates, it becomes easier to pay down the principal amount. However, this option often requires you to have a solid credit record or a creditworthy co-signer. Some lenders may also qualify you if you have a solid employment history or stable income.
3. Pay more money, more frequently
Besides consolidating and refinancing your loans, you can also get rid of debt earlier by paying more money than the minimum required. Putting more money, more frequently, toward paying down the principal amount can help significantly reduce the period it will take to pay off the loan. Paying down your loan quickly allows you to save a lot of money in interest. A great way to make larger payments is by ensuring that a portion of what you get in tax refunds and bonuses is put toward paying down the loan. You may also want to budget your money accordingly and reduce your spending to ensure you can make an extra payment on your loan each month.
Endnote
Without a proper repayment plan, loans can be a huge financial burden. Employing the above strategies can help you get rid of debt more quickly and efficiently. Paying off your loans faster allows you to pay less interest, reducing your loan’s overall cost by hundreds of dollars.