If you have recently taken out an instalment loan, it is crucial that you pay it back on time. This will help you to avoid extra fees that can seriously run up the cost of your loan. There are lots of little things that you can do to ensure this doesn’t happen. You will need to consider this information carefully before even applying for a loan.
Choose Your Loan Amount Carefully
One of the very first things you should do in preparation for obtaining a loan is to know how much you need. You will have to come up with an exact figure so you know what to put on your application. When you only take out exactly and what you need and no more, you will instantly increase your chances of paying it all back on time.
Pay more than the Minimum
Instalment loans require you to make payments in regular monthly increments. You should try to pay more than just the minimum required amount. This will also help you save money because you won’t be paying as much interest.
Try to make double payments each month so that you can pay back the loan early. Just make certain that you won’t incur any penalty fees for doing this. These fees have become pretty uncommon with private lenders, but they do still exist.
Make Extra Money on the Side
When you get another job on the side to supplement your income, you should have no issues with returning all of the money you’ve borrowed. This can help you pay back your instalment loan on time or even before the due date.
There are an endless number of ways that you can get extra money, such as selling certain items you no longer want online. You can also try to get a part time job until you pay back your loan. If you know any places in your area looking to hire, this is something to consider.
Get an Extension if Necessary
Sometimes it can be difficult to get an extension on an instalment loan, but a lot of lenders are open to doing this for their borrowers. You will need to make a point of letting your lender know if you will have problems making your payments on time.
Call up the lender and explain your situation as calmly as possible. There is a good chance that you will be able to get some more time to pay back everything you owe. You might even be able to avoid paying late fees, though it is unlikely. It all depends on how flexible they are.
Refinance the Loan
You also have the option of refinancing your instalment loan. This can help you to get a better interest rate, which will make the loan payments more manageable. Refinancing is not something that works for everyone with this type of loan, but it can be useful for some.
Refinancing basically consists of getting another lender to assume your debt, and then paying them back the full amount over time. This is really only worth it if you are able to get a lower interest rate than you had before. The best thing you can do is to spend some time getting quotes from lenders that offer these financial services.
If you currently have an instalment loan for more than £1,500, refinancing could be the way to go. There is no guarantee that you’ll be approved, but there’s no harm in submitting one or two applications.
Choose Automatic Repayment
Some lenders will offer borrowers the option of automatically repaying their loan. In this case, the money is instantly taken from your current account when the loan is due. If you are afraid of forgetting to pay back what you owe, you will probably want to do this. It is a requirement for a lot of lenders, though not all of them.
Why Should I Pay my Instalment Loan off early?
There are numerous reasons why paying your loan off early is a good idea. The number one benefit of doing this is that you won’t have to pay as much interest on your loan. It will also help your credit quite a bit. If you currently have a low credit rating, this is something you’ll need to consider. You also won’t have to stress out over whether or not you are going to make the due date.
When you make paying back your instalment loan a priority, you won’t have to worry about additional fees or problems with your credit. These loans are usually pretty easy to pay back when you take the right approach. Just make sure that you are careful about doing this, because it can be easy to make a small but damaging mistake.