All you have to do is employ a few tricks to become debt-free faster. You can save money and won't have the burden of debt hanging over your head. We'll go over how each repayment strategy works so that you can pick the one that fits your budget.
Before you repay your loan early, check that your lender does not charge a prepayment penalty. It's rare, but a few lenders will charge a fee for paying the loan early or making extra payments.
Make Bi-Weekly Payments
Switching to bi-weekly payments is a simple strategy that can shave months (or even years) off your loan term. Instead of making one monthly payment, split that amount in half and pay it every two weeks. You'll end up making one extra payment per year.
That extra payment goes straight toward your principal, helping you reduce your balance quicker and pay less interest over time. It's an effortless way to pay off your loan faster without feeling the pinch. Just be sure your lender accepts bi-weekly payments.
Pay a Little Extra Each Month
One of the easiest ways to pay off a loan faster is to round up your monthly payments to the nearest $50. For example, if your monthly payment is $315, you'd pay $350. That small bump may seem minor, but it can significantly reduce your loan balance and the total interest you pay over time.
Rounding up payments is especially helpful when dealing with emergency same day loans, which tend to accumulate interest quickly. Consistently rounding to the nearest $50 or even $100 per month can speed up repayment by months or even years. Check with your lender to confirm that the extra amount will be applied to the principal, not future interest or payments.
Pay More When You Can
Whenever you come into extra money, consider putting some or all of it toward your loan. Additional funds could be from:
Bonus at work
Tax refund
Cash gift
Selling old items
These lump-sum payments can make a big dent in your balance. Unlike regular payments, extra contributions don't need to be scheduled; you can make them whenever they fit your finances.
Over time, occasional extra payments can reduce the length of your loan and save you a substantial amount in interest.
Reevaluate Your Expenses
Paying off a loan faster often involves finding extra money in your current budget. Take a close look at your monthly spending to identify areas where you can cut back. Do you dine out too much? Are there subscriptions you don't use? Do you make a lot of impulse purchases? Even small changes can free up funds that you can redirect toward your loan.
For example, if you trim just $100 a month from your discretionary spending, that's $1,200 a year you can put toward your debt. When applied to the principal, those extra dollars can reduce the total interest you owe and shorten your loan term. You can reduce your debt faster and ease financial stress.
Refinance Your Loan
Refinancing can be one of the best ways to get out of debt sooner, if you qualify for better loan terms. You may be able to reduce your annual percentage rate (APR) by 10% to 20% if your credit score has moved into the good range since you took out the loan. Or if interest rates have dropped.
A new loan with a lower interest rate will be easier to repay. Note that lenders tend to offer lower interest rates coupled with shorter repayment terms. That means higher monthly payments. You'll be out of debt sooner, but make sure you can afford the new payments.
Pick Up a Side Hustle
If your budget cannot accommodate any extra payments, you need to find a way to get more cash. A side hustle can help you do just that. Whether freelancing, driving for a rideshare service, pet sitting, or selling handmade goods online, even a few extra hours a week can generate income you can put directly toward your loan.
Every extra dollar earned and applied to your principal reduces the total interest you'll pay and shortens your loan term. The key is to commit your side hustle earnings to your loan, not everyday spending.
Final Thoughts
When you're staring at a loan balance, it can feel like you'll be in debt forever, but that's far from the truth. It is entirely possible to shorten the life of your loan and save money on interest. You simply need to find a way to pay down the principal faster. That could mean making bi-weekly payments, rounding your monthly payments to the nearest $100, or putting any extra money that comes your way toward your loan. Every little step you take brings you closer to being debt-free.
Paying off a loan faster isn't about making huge sacrifices. Small steps can make a big difference in speeding things up. Bit by bit, you'll shorten your loan time and keep more of your money.
