5 Tips to Help You Pay Back Loans

  

Do we need to duly make plans for paying back our loans as much as we do for the loan application process? Yes, it is very important. So many people fall into the trap of inability to pay back their loans because it was handled with levity and they didn’t take the right steps towards making their loan repayment process a smooth one.

If you are about to take a loan of any kind or you have taken quite a number of loans already and you want to be intentional about paying back effectively .Below are five useful tips to help you pay back your loans easily and without stress.

 

1) Do not take on more loan than you can handle 

Before taking a loan, you should check your financial status and capability to see if it is debt absorbing and to see if your income is secured enough to continuously pay off your debts. This is also very important to avoid spending  money you don’t have and then falling deeper into debt. You should weigh your income against the highest loan you can take, this will help you determine the amount of loan you can actually pay back.

 

 2) Sum up your payments. 

This means paying more than the minimum amount on a loan payment. For example, if you owe N75,000 per month then pay N100,000 or you can pay the N75,000 more than once in a month .It is a method that is very beneficial in reducing the time that it will take to pay off the loan, and also provide some financial perks. Making extra payments on your loan  help you clear off your debt sooner, reduce the amount of interest you owe and in turn helps you save money. 

Check out 5 reasons why you should pay back your loans early.

Also, if you have more than one loan to pay up endeavor to pay off your most expensive loan first.

 

 3. Cut down on your expenses 

It is important to spend less especially on things that we can do without at-least until we do not have debts to pay. If you have a large amount of student loans to pay off then you can squat with a friend instead of renting your own apartment, should the situation allow it. This is a good strategy to live cheaply, spend less and gather funds to put towards your loan payment. Another way to control your spending is to have a budget and stick with it. Plan your monthly finances and break them into weeks and days. Follow your budget diligently and do not give in to any external spending outside your budget to disrupt your plan. Then in no time you will be able to pay back your loan.In cases where you already have a budget prior to taking the loan, you can re-evaluate your budget to see where you can eliminate unnecessary costs. When you find an area in your budget to cut down, remember to put the money you are saving from it towards your loan payments. 

 

4. Find means to earn extra income 

If you have got extra time to spare then you can pursue an additional job or side hustle as another stream of income to put towards paying back your loan and as income increases endeavor to increase repayments.This allows for having enough money to cater for your needs as well as to pay off your debts .

Check out 10 side hustles to increase your income in 2022.

In cases where you gain some extra money like pay raise,inheritance, lottery winnings,or even tax return refund, do not be tempted to put this money towards wants and focus on putting it to use towards your loan payments. 

 

5) Refinance or consolidate your loan

Refinancing your loan means to take a new loan to cover up for the rest of your unpaid debt while loan consolidation means taking a higher loan to pay up smaller ones. Either refinancing or loan consolidation, to be able to pull them through, you will need to have a high credit score that displays your credit worthiness. You can also turn to friends or family for a loan. See this as a last resort to paying back your loans if it’s becoming to seem quite tasking making your loan payments. However, there’s limit to the extent at which you can keep collecting a new loan to cover up for another. So, you should learn to use other means as previously stated.

 

With these tips, paying back your loans will become less burdensome and then you can regain your financial independence sooner. Also, try not take on loans with an extremely high interest rate to avoid draining your finances and ensure you develop a perfect repayment plan before proceeding to take a loan.