In these uncertain times, sudden unavoidable expense or financial emergencies are the stuff of nightmares. Instead of having zero options, installment loans help tide you over and allow you to make payments over time.
According to Leap Credit, online installment loans are, ‘a specific amount of money you borrow and then pay back within a certain time frame with a fixed payment every week, two weeks, or month.’
Now, while receiving a lump sum is always relieving and gratifying, some borrowers struggle to finish payments on their installment loans. To help you get set up for success, we are sharing these effective tips on how to successfully pay back your online installment loan. After all, the faster you are out of debt, the better.
Double Your Payments
The longer you have your loan, the more you’ll pay in interest fees. You want to minimize this, and doubling up on payments can help. Pay more than your lender requires you to. For example, say your loan terms require you make a single monthly payment. Instead, you could give them a payment every two weeks. If your loan requires two payments a month, pay them every week. Contact your lender and confirm that they’ll apply the payments to your loan without penalizing you before you do this. This is very important because some lenders don’t allow you to make extra payments without penalties.
Make Extra Money
If you’re worried about having enough money to pay back your loan, start trying to make extra cash. You can put any extra money you make toward this loan. Start by seeing if there is anything you can sell online, or you could take a jump into the gig economy. Services like Uber, DoorDash, and Lyft are thriving. What’s even better, you can work at your own pace on your own time without any pressure to meet a set amount of hours. As your money starts to stack up, send it straight to your loan company to pay down your balance quicker.
Ask About Discounts
Did you know that some lenders will give you discounts on your interest rate for different reasons? If this isn’t the first loan you’ve taken out with a company, you could get a discount for being a repeat customer. Automatic debit signup is another way to get a discount, or you could go paperless. Although this discount most likely won’t be huge, anything can help. You may have to contact customer service to get these discounts, but they can add up over the life of the loan.
Create a Payoff Plan
When you first get the loan, you should create a realistic payoff plan. Write it down or put it in a digital format. Write in when you have to start repaying your loan and when the payment is due. Set reminders in your digital calendars. This will help ensure that you don’t miss a payment, and it’ll also ensure that you don’t overdraw your account because you forgot about it. Stick as close to this payout plan as possible. This could mean you cut out a few frivolous expenses until you pay it off. However, it’ll be worth it.
Know Your Loan Terms
You should have absolutely no doubts when it comes to your loan’s terms. You have to have a good understanding of what the lender expects in terms of payments. Know when you have to pay back the loan by, how much interest the loan carries, and whether or not the lender will let you extend a payment deadline if something comes up. If there’s a grace period, you want to know what it is. These loan terms shouldn’t change throughout the life of your loan.
Round Up Your Payments
If you can’t afford to double your payments every month, make a point to round up your payments. For example, say your loan has a payment of $275 per month. You could pay $300 instead. This isn’t a lot of extra money, but it’ll add up over the life of your loan. If you have a year loan period, that extra $25 can shave a month off your loan term with $25 leftover. This will be really helpful if you make two payments a month because you’ll pay it off much quicker.
Set up Automatic Withdrawals
The last thing you want to do is forget your payments. Even one missed payment can have a negative impact on your credit score. You can avoid this by setting up automatic withdrawals from your checking account. You do want to make sure you have enough money in there to cover the cost of the loan payment, so you don’t overdraw yourself and incur more fees.
Cut Back on Luxuries
Most people have subscription services that they can pause or cancel for a few months. If you can, you can take the money you’d normally spend on these services and use it to pay off your loan quicker. Even a few dollars will really help you chip away at the balance until you pay it off. Once you pay it off, you can easily resume your services without an issue.
Go With a Reputable Company
You want to get your installment loan through a reputable company that has no hidden fees and straightforward terms. This can help ensure that you pay off your debt with as minimal fuss as possible, and it also improves your chances of having a responsive customer service team in place if anything should come up. Do your research when you start shopping around for companies and comparing reviews. You can use the Better Business Bureau to check a company’s reputation. This will help you find companies that offer competitive rates.
Now you know several tricks how to pay installment loans. You can use this information to decide whether or not this type of loan is right for you or not. These tips will help you maximize your savings while getting your finances on track while paying back your loan. Pay it off as soon as you can to help offset the higher interest rates. Save up for an emergency fund, and improve your financial health with smart money decisions.
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