There is often a lot of talk these days about repaying loans early. If you have a personal loan, you may wonder whether you should be thinking about repaying it early. However, you will need to think carefully about this in order to make sure that it will be the right decision for you. There will be different things that you should consider.
How much you will Save in Interest Payments
It can be a good idea to calculate how much your interest is and how much you will pay until the loan ends. You should be able to see how much you are paying each month if you get a statement, but if it is not obvious, then you can contact the lender to find out. If you consider how many months you have left to pay, then you will be able to work out the total amount of money that you will pay in interest over the whole term of the instant short term loan. Then you will be able to think about whether you think that it will be a good idea to repay it early and save the money.
Whether there is an Early Redemption Fee
With some loans there will be a fee to pay if you decide to repay it early and this is called an early redemption fee. This can vary between lenders and some may not have a fee at all and some could have a high one. It is really important to find out how much it is. This is because if it is really high, it might be cheaper not to repay the loan early, so you need to find it out and compare it with how much money you will save if you repay the loan early.
Whether you can Manage to Pay More
You will also need to think about whether you will be able to afford to pay more off. You do not want to be in a situation where you will need to borrow money using an overdraft or credit card then this could be a more expensive way to borrow the money so you need to be careful. You may need to change the amount that you are spending on other things to ensure that you have enough money to make these extra payments.
This could mean that you will have to budget. It is important for you to know how much money you have coming in and how much you normally spend and then you will be able to work out whether you will have enough. It could be a case of working out where you can reduce your spending and where you can earn more. This obviously sounds simple, but could be pretty tricky.
A good place to start is to compare prices on everything that you buy. If you check that you are not paying more than necessary, then you might be able to save money on a lot of things that you buy. Even a few savings here and there can add up. It is also good to ask yourself whether you need all of the items that you are buying and this should help you to buy less items. The money that you save, by not spending so much could be put towards paying off more of the loan.
Earning more might sound harder, but it may not be. There are lots of ways to get extra money and some are much easier than others. For example, you could sell things that you own and no longer want such as books, clothes and things like this. Although this will not bring in a regular income, it could bring in a lump sum of money that you could put towards paying off the loan. You could also do odd bits of work perhaps some temp jobs, freelance work or things like that. You could also consider renting out a room in your home, perhaps to a lodger, B&B guests or even for someone to store things in.