While debts such as personal loans may be necessary in some stages of life, it’s important to try and pay them back as quickly as possible so as to save on interest charges and ensure they don’t spiral out of control. Fortunately, there are a number of simple tips and tricks that can help you to pay off your loan faster and save on the interest charges. Here are SRG Finance’s top tips for paying your loan off earlier.

Check additional payment fees

Checking if your lender has any penalties, fees, or limits for additional payments into the loan is the first step in trying to pay your loan down faster. In addition, check that there are no penalties for paying out the entire loan ahead of schedule.

Understand your loan product

Knowing which payments attract fees – if any – and whether there are any savings to be had by opting for direct debit or online banking arrangements. Even the smallest of savings can be allocated to your loan rather than fees; every little bit counts.

Automate payments

If your payments are currently not automated, consider having this set up. If you rely on yourself to remember to pay them off, this can result in the odd penalty fee, and worse still, usage of repayments for other expenses. By automating these you will ensure that nothing is missed and the required funds are always allocated to the loan, and not at the mercy of impulse spending.

Make additional payments

Once you’ve established that you can pay additional amounts without penalty, it’s a good idea to strive to make additional payments into the loan wherever possible. If you’ve managed to save more than usual one month, put that into your loan. If you’ve received a tax refund, put that into the loan. The more you can add to the loan, the less interest you’ll be paying and the faster you’ll be able to pay the loan off.

Lower your interest rate

Talk to your lender about the potential to lower your interest rate. Sometimes an interest free credit card can help pay the entire balance of your loan, and then you can divert your payments to the credit card. Be careful, however, as these are usually shorter terms. In any case, the less interest you pay, the more you’ll be paying off of your actual principal loan amount and the faster that loan balance will fall.

Increase the frequency of payments

A simple trick that’s usually just a matter of timing is to increase the frequency of your payments. If you’re currently paying your loan repayments on a monthly basis, then increasing this to fortnightly or even weekly can have a dramatic impact on how long it takes to pay down your loan. This is because the more frequent your payments, the more often they’re being applied to your principal loan amount and the less interest you’ll be paying in the longer term, as interest is usually calculated daily on your loan balance.

Increase the amount of your regular payments

You’ll likely have a set repayment amount that’s either direct debited or paid into your loan by you per repayment period. By simply increasing this amount you have the chance to significantly reduce the time taken to pay off your loan. Whether you simply round your payments up each time or commit to an extra fixed amount per repayment (for example, if you received a pay rise), this is an easy way to pay your loan off quicker. Less interest will be paid and the principal will be paid off more quickly.

Create a plan and a budget

When dealing with debts, it’s important that you create a plan for paying them down quickly. As a general rule of thumb, plan to pay down debts with the highest interest rates first. Creating a budget is a vital step so that you can understand what your income and expenses are. Once this is clear, you can look at ways to decrease your spending and allocate the additional savings to your loans.

Earn extra income

Simply speaking, the easiest way to pay debts off faster is to earn more. Sometimes this could just be a matter of taking on some additional casual work, or doing some odd jobs just to get ahead on your loan.

These are all very simple tips that can be taken on by anybody. The trick is to focus on paying down your loan as quickly as possible with an increased payment frequency, larger regular payments, and allocating any additional savings to paying down the loan. The earlier you can start paying additional amounts, the faster you can reduce your loan balance due to interest accumulation. These simple tricks can shave years off your loans, so are well worth considering. The faster you can pay down your loans, the faster you can achieve freedom from debt and begin building your financial future.