how to pay off a loan faster

In Canada, 65.33% of the population has taken out a personal loan to pay for fun events, such as a wedding or vacation, as well as practical expenses, like bills or mortgage payments. If you’re one of those people, then you might be looking for how to pay off a loan faster. 

Regardless of why you took out a loan, paying it back should be your number one priority. The longer you wait to pay the loan back then the more money you will have to pay in the end due to interest rates. 

Keep reading for seven ways that work when it comes to paying off a loan faster. 

1. Round-Up When Making Payments

A good way to get ahead of your loan is by rounding up when you make your monthly payments. For example, if your monthly payment is $345.07 then you could round this up to $400. This way you’re paying an additional $54.93 per month that you may not even notice. 

If you think of your payment as the rounded up number, then you shouldn’t have problems when it comes to paying it every month. Basically you’re setting your own payment amount as long as it is doable for you and your finances. This will help you pay your loan off even quicker. 

2. Make Biweekly Payments

When it comes to paying off your loan you’re only required to pay the minimum each month. Even though you’re allowed to do this, it will not help you pay your loan off any quicker. If your job pays you every two weeks, then it might be easier for you to make smaller payments biweekly

For example, if your monthly payment is $300 but you pay $175 every two weeks, then you’re actually going to be paying an additional $50 a month. This is great for people who have trouble budgeting when they get paid. You can pay a smaller amount at a time while doing more good for you in the future. 

By paying extra money every month you’re putting yourself ahead of the game. You are also decreasing the amount of interest you have to pay. 

3. Enroll in Autopay

Enrolling in autopay is a great way to help you out for a few reasons. The first reason is it will take a lot of stress off of you and making sure you pay on time. It will help to make sure you never receive a late charge because the money will automatically get taken from your account when it comes time to pay. 

The second reason is that many lenders offer a discount when you enroll in autopay. This could take your interest rate from 3.75% to 3.5% and while it may not be a huge amount of money this will still help you to pay your loan off faster. 

4. Refinance the Loan

If you have semi-good credit and always pay your balance on time, then you might be able to look into refinancing your loan. Refinancing your loan can help you get lower payments, save interest, and pay the loan off quicker. 

Refinancing your loan is the best way to help lower your interest rate. The longer it takes you to pay back your loan, then the more money you will owe because of high-interest rates. Refinancing can sometimes knock your interest rate down a few percentage points and certainly help you in the long run. 

5. Use Extra Money

If you ever come into extra money at some point, such as a raise, bonus, or gift, then you should try to put some of that extra money towards paying off your loan. You can allocate your money in a simple yet effective breakdown. Use 50% of the money to pay back your loan, save 30%, and spend the last 20% on something fun for you. 

You could also look into getting a second job that can be done in your free time or online to help pay off your loan. Jobs like selling clothes that you don’t wear anymore, renting out a spare room, or even using a skill you have to freelance can help to make you extra money on the side. Try to direct a lot of this extra money towards paying off your loan faster. 

6. One Extra Payment

Something that many people do to help pay a loan off faster is to save enough money to pay one extra payment each year. You can also use money from your tax refund, bonus, or side job to make this extra payment. 

Instead of just making one large extra payment, you may want to spread it out over the year. If your loan payment is $600 per month, then paying $650 every single month for a year will result in paying an extra $600. Finding any extra money is a great way that can help you pay off your loan quicker. 

7. Try Going Paperless

Just like enrolling in autopay, sometimes lenders will give you a discount if you decide to go paperless. Going paperless helps to benefit you, the lender, as well as the environment so there really isn’t a reason that you shouldn’t do it!

You could get a small reduction in your interest rate if you opt to go paperless. Every cent counts, especially in the long run. Having a lower interest rate will save you money and make it more efficient for you to pay off your loan. 

How to Pay Off a Loan Faster

Figuring out how to pay off a loan faster is no easy task. It is going to take a lot of research and budgeting on your end to figure out where you can get the extra money. 

The quicker you can pay off your loan means that you’ll have to pay less interest which will save you money in the long run. You also should look into ways that can help you lower your interest rate. By lowering your interest rate and paying more you’re going to be saving a lot of money. 

If you’re in need of a loan quickly, then check out Captain Cash which requires no credit check and gets you money fast.