If you have a loan, then it becomes necessary to look for means of doing away with the interest charged on the loan. By so doing, you can still reduce the loan balances and even repay the loans even sooner. Below are 13 strategies that can help to complete the loan or at least decrease interest on your loans and thus save money.
Refinancing Your Loans: Refinancing is a perfect way of lowering the interest of the money you borrowed. This is when you borrow a new loan at a lower interest rate and then utilize it to clear your other interest charges.- Make Extra Payments: Paying some extra money to your loan will also minimize the interest charged. If you make part payment to your loan it will directly reduce your principle amount but If you stick to making minimum payments (EMI) each month then you just pay the high percentage of interest.
- Use Balance Transfer: If you have credit card loan or any other loan, you can chose an option to transfer your loan balance to another company who gives you lower or better interest rate.
- Choose a Shorter Loan Term: If you wants to borrow the loan, it is advisable to select a shorter loan tenure which usually means that the monthly instalments are higher, yet by the end this may be cheaper because of lesser interest charged.
- Make Bi-Weekly Payments: You can chose an option to make bi-weekly loan payment instead of monthly payment. This might help you to pay down the principal faster and reduce the amount of interest.
- Pay Attention to Fees: Whenever you take a new loan, refinance the loan or transferring to a new loan, you have to make sure and pay attention to verify any fees, charges or hidden fees that may be associated with the loan. As these fees will add up to your loan and increase the overall cost of the loan.
- Improve Your Credit Score: you should always maintain a Good/Excellent credit score as this will help you qualify for lower interest rates on loans because some company offers lower interest rate based on your CIBIL score. You should always pay your bills on time, keep your credit utilization low and avoid opening too many new credit accounts to improve your credit score.
- Choose the Right Loan Type: There are many loan type and each loan type comes with different interest rate. Whenever you take out a new loan make sure you choose the correct loan type that offers the lowest interest rate and best suits as per your needs.
- Negotiate With Lenders: If you running an existing loan you may consider the negotiation with your lender to see if they are willing to lower your interest rate. As most of the banks are always ready to negotiate to maintain the good relationship with their customers. This may be particularly effective if are making payment on time and maintaining a strong credit score.
- Pay Loans Off Early: If your salary is increasing every year by some percentage of amount you should always consider to increase your EMI amount or make the part payments. so you can pay off your loan as soon as possible. This will help you save money on interest and reduce the overall cost of the loan.
- Avoid Late Payments: Whenever you have any kind of Loan, you should always maintain the sufficient money in your bank account so your EMI payment won’t over due. Otherwise it will cause you the Late payments charges and higher interest. Late payment will also impact on your CIBIL score. So always make the payment on time to avoid these charges.
- Consider a Co-Signer: In case you have poor credit or a limited credit history, you might be able to qualify for a lower interest rate with having a co-signer on your loan. This person will be like a guarantor, who will be responsible for the loan if you are unable to make the payments.
- Use Auto-Pay Setting: Now a days, whenever you takes home loan, personal loan etc, banks always sets the auto debit option on your bank account so your EMI can be auto deducted without any miss. But in some cases like if you take a loan through credit card you have to set Auto pay manually. So please keep in mind you always have an auto pay option for any kind of loan so you never miss the payment.
In conclusion, there might be several strategies you can use to reduce the amount of interest. You can consider and check different banks offer online which has lower interest rate. Through refinancing, making extra payments, choosing the right loan type, and paying attention to fees will help you to keep more money in your pocket and pay off your loans faster.
