How to Repay your Personal Loan Quickly

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If you have a personal loan then you may be toying with the idea of repaying it early. This will usually mean that the total cost of the loan will be less, but if you are doing it for financial reasons it is wise to check carefully. This is because the lender might have an early redemption fee. This is a charge that they make to those that repay early. It can just be a small admin fee, but sometime sit is much larger, this is to cover the interest that they will lose if you repay early or possibly to reduce the temptation for you to switch to another lender. If you look into this and still decide that you would like to repay early, then you will need to come up with a plan on how you will afford it.

Use savings

If you have savings then you will need to think about whether it will be a good idea to use these to pay off the loan and it is also worth looking at investments with the same question as well. To check this out you need to firstly calculate how much you are paying on the loan in total including interest and any fees. Then work out how much you are getting back as a result of having money saved or invested. Once you add these up, you will be able to work out whether you will be better off by keeping the money saved and collecting the return on that or by using it to repay the loan via your payday lender. It is most likely that savings will have a lower interest rate than you are paying on your loan and so financially it will make sense to use them to repay the loan. With investments it is very possible that the return that you are getting is higher than you are paying out on the loan. Even if it is not, you may want to hold on to them in the hope that they increase in value in the future. This is because the value of investments fluctuates and it is best to have them for a significant period of time before selling them. It might be wise to take the advice from an expert such as an independent financial advisor on this.

It can be difficult to part with savings and investments though. This could be for a number of reasons such as the fact that you might be saving up for a certain thing and really want to buy that rather than repaying a loan or that you like having the money there for security to know you have a backup. You may also feel that you have worked really hard to save up (and there is no denying that it is hard work) and that you therefore do not want to spend the money but keep it.

Spend less

If you do not have any savings, enough savings or do not want to part with your savings, then you will need to find an alternative way to get the money that you need. One way to do this is to spend less on other things. For some people this will be easier than for others as it will depend on how much money you have and what you currently spend it on. If you spend it on necessities such as rent, utilities, food and transport to work, then you will need to continue paying for all of those things. It may be possible though, to reduce how much you are spending on some of these things though by switching to alternative retailers or suppliers that are cheaper. However, cutting back on luxury items is where you are likely to be able to free up the most money. You will be able to manage without these much more easily as they are not something that you have to buy. That is not to say that it will be easy as we enjoy luxury items and they can add value to our lives. Therefore, you will have to decide what you are prepared to cut down on or go without in order to be able to repay your loan.

Earn more

Earning more money is an option which is attractive to many people, especially those that do not want to spend less on luxuries or those that do not buy luxuries anyway. Of course, this is not an easy option as it takes up time and you may not have much time available. It may also take you away form your family or your hobbies. It can be really helpful though and it is possible to find all sorts of opportunities to earn extra, both online and offline so it could be well worth investigating the option.

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