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6 Tips for Paying Off Your Loan Faster

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Loans; nobody likes them. But when you don’t have the cash in hand, a loan seems like the most practical and reasonable method for buying what you want. The downfall of having a loan is this: if you can’t pay it off, or aren’t the best at managing your money, a loan can leave you in a pool of debt, with bad credit history which could restrict you from obtaining finance for a new car, home or anything else.

Here at The Loan Panel, we know all too well how hard it can be paying for everyday expenses whilst paying off your loan, which is why we’ve put together a list of handy tips and tricks to help you get your finances in order, allowing you to pay off your loan faster.

Tip #1: Compare Your Options

Contrary to popular belief, when purchasing your new or used car, the dealership doesn’t always provide the best financing options for you. When it comes to these situations, one of the smartest things you can do is to compare your options. You may spend a lot of time researching different models, makes and brands and forget about finding the best lender for financing your car.

At The Loan Panel, our lenders make this process a whole lot easier. We research your broker information to find you the cheapest product, check for additional fees, interest rates and loan terms and provide you with your overall comparison rate.

The comparison rate is a method used to standardise loans, allowing our team to easily compare and contrast your financing options. It comprises of the interest rate and any other fees or charges that may be included in the loan.

By comparing your options, you can be sure to get the most out of your loan and be on your way to owning your brand new car, sooner.

Tip #2: Make Additional Repayments

Making additional payments on your loan is one of the best ways to clear yourself of debt faster and save you money in the long run. We recommend always checking with your financier about whether these repayments will include additional interest or other fees. If they don’t, then this method is a great way to reduce the overall interest charges on your loan.

If you’re struggling to find the money to make additional payments, because let’s face it, most of us don’t have a lot of room in our budgets, then you may want to consider some of these handy money-making-money-saving tricks:
✔ Sell clothes or unwanted items and use the money to make repayments.
✔ Turn your impulse-buying habits into “impulse-saving habits” – any time you feel the urge to buy something, put this money into a savings account or piggy bank.
✔ Don’t spend your money on unnecessary things including; coffee, snacks and lunches. Bring your lunch to work and save the money you would spend for your repayments.
✔ Consider a part-time job for some extra cash – babysitting, dog walking, house cleaning or even a retail job. These can all help in raising extra funds.
✔ Get involved in a fundraiser. Organise your own cake stall or car wash to raise some money towards your new car.
✔ Keep yourself busy. The busier you are with work or other projects, the less likely you are to go out shopping and spend money on things you really don’t need.

Tip #3: Be Smart About Your Money

Avoid adding unnecessary costs to your car loan. Adding extra tinting or a decked-out speaker system may at first sound appealing, but these expenses can easily add up and can accumulate to become thousands more on your car loan. Consider purchasing these items separately or pay for them in cash to avoid adding extra expenses onto your loan.

When it comes to paying off your loan every week, fortnight or month, an easy way to reduce your term is to round up your fees. For example, if your weekly repayment is $147.80, ask your financier about paying $150 instead. An additional $2.20 a week can make a huge change in your overall repayments and can ultimately help with paying off your car loan sooner – because let’s face it, when it comes to loans, every penny counts!

Tip #4: Be Realistic With Your Loan Term

There’s nothing worse than underestimating or overestimating the amount of time you will need to pay off a loan. Underestimating can lead to penalties and the possibility of defaulting, while overestimating could have you paying more interest than necessary.

This is why, when it comes to car loans, an efficient budgeting strategy and forward thinking approach is the key to paying debt off faster. If you can realistically work out how much you can afford to spend on your loan repayments each week then you will be on the right path to finding an appropriate loan term and can pay off your car loan in a suitable time frame.

Tip #5: Get a Pre-Approved Loan Before You Buy

Plan ahead and get a pre-approved loan from your preferred lender before you confirm your decision to purchase a car. By using this method, you can think clearly about your finances without the pressure from a salesman or dealership.

Strategically planning your loan before you buy a car can help you get a feel of what your budget parameters are and how much you are willing to spend at the car yard. You can also avoid persuasive pressures and the risk of getting in over your feet.

Tip #6: Consider Refinancing

There’s nothing worse than buyer’s remorse. If you’ve realised that you’ve made a mistake by choosing the wrong finance company, don’t stress, because there’s a way out! Refinancing gives you the option to find a cheaper, better alternative. By refinancing, you can end up reducing your interest, repayments and term of your loan. To read more about refinancing, click here.

Benefits of Paying Off Your Loan Sooner

Paying off your loan earlier than the given term has loads of benefits. Generally, the longer the term, the more interest your loan will accrue. The fact is, if you can shorten the term of your loan, you can save more money in the long run and spend this on more important things-rather than interest!

With the right budgeting and an active approach towards your finances, there’re no reason why these steps won’t help you in paying off your loan sooner.

Above all, at The Loan Panel, we recommend keeping it real. Make sure that your loan is realistic, that you can feasibly pay it off in an acceptable time frame and of course, enjoy the benefits of one day owning your own car or even your own home!

If you’re still unsure about your current financial position or your current loan, contact us today and talk to one of our helpful team who can quickly assist you with how to save money and get the best outcome.