Nowadays, borrowing money from lenders has become easy. While traditional credit agencies observe stringent measures for an applicant to qualify for loans, other investors are willing to invest in people with low income and bad credit. Extending loans to this type of borrowers can be risky, but there are instances when it is this group of borrowers that pay regularly. For them, being a diligent payer can allow them to get approved for another credit.
Although bad credit borrowers seem to be less capable of meeting their dues, they do their best to pay their installments regularly. How can this be possible? Here are some ways to pay off your debts in a more manageable and faster way despite your low-income.
Pay every 15 days instead of the usual 30 day-cycle
Paying every two weeks instead of once a month can result in a smaller sum to pay. If you need to pay $200 a month, you would have to give your lender only $100 every 15 days. Doing this would result in a lower interest rate because you are paying more frequently than you should.
Avoid payments with extra centavos
If your amount due for 15 days is $127, round it off to $150. That means you are paying an extra of $23 every 15th and 30th of the month, which totals $46. That means that you pay an extra $552 a year. If your loan is payable in 5 years, you could have shortened your repayment period by around 15 months. Instead of paying for 60 months, you will be debt-free after 45 months or less.
Earn extra and use the amount to pay your loan
Nowadays, there are many ways to earn more than your regular income. If you have baking skills, make baking your hobby. If you can make two or three cakes and sell them each weekend, you can make extra payments to shorten the repayment period further.
By being hardworking and committed to making extra money, you might be free from your loan in just three years instead of five.
Use the amounts you save when buying discounted items
When you go to the mall. No one would know you paid less for your elegant bag or your expensive purse. If you could have both at a 50 percent discount, make sure to use the money you saved in making extra payments for your loan. If you do this every two months, you would be free from your debt soon.
Refinance your loan
If your lender allows refinancing a loan, you can make this work to your advantage. When you have paid around 50% of the investment, refinance the remaining half, making your new debt smaller and enjoying reduced interest. Stay consistent in finding ways to make more payments every month. Using this method, you could have shrunk your repayment period by a year or more. A few sacrifices can result in making you debt-free sooner than you expected.
Shop for loans that do not charge fees
Opt for loans that are 100% free of charges. Some lenders would ask you for an application fee and a processing fee, and these can add to your debt. No matter that the financial institution charges you only $10 – $20 would mean an addition to what you owe the lending company. Your mortgage could balloon when you have to pay interest on these amounts as well.
Going to the bank to process your no credit check payday loan can cost you gas or fare money. Why not apply online to get rid of the extra expenses? Keep what you save and use it to top up your next payment.
Benefits of Paying Off a Loan Quickly
Your extra payments can reduce the number of years that you must pay your loan. Instead of having to pay for five years or 60 months, you might make it in four years or 48 months only. Since the lender charges for 60 months of interest, paying off your debt in just 48 months saves you 12 months’ worth of interest as well.
Having a loan to pay regularly can be stressful. By settling your loan early, you get rid of stress and worries. Instead of working during weekends, you can now relax, spend time with your loved ones, or even laze around and relax.
Being debt-free can boost your morale and self-confidence. Besides, you now present an excellent image to your lenders, and you can expect them to give you a loan again when you need it. You have nurtured your credit history and increased your credit rating. You can now get financing for the things that you want to have but may cost more because you are now eligible for a car or house loan and a credit card with high limit