How can you pay off a secured loan early?

Suppose you’re like most Americans and owe money towards a huge loan. If that’s the case, it could be hundreds of dollars of credit card debt, an enormous mortgage on your name, or making monthly auto installments. The loan is something you deal with in your daily life. That means you’ll pay thousands of interest charges during your loan(s) term. Also, there’s the psychological burden of knowing you’re in debt hundreds of thousands of dollars and will have to repay the loan over time.

It’s depressing, but there’s no reason to make it this way.

Did you know there are easy yet effective techniques to lessen your burden? Using a carefully executed method, you can pay off your auto loan, mortgage or credit card debt, or any other type of debt you carry more quickly than you imagined possible. The techniques you’ll learn to employ won’t affect your finances in any drastic manner. However, they could be a significant difference in the interest you’ll pay throughout the loan and also aid in getting debt free faster.

It’s possible to free up the money you earn each month. You can use that earned cash to purchase the items you desire instead of pouring up interest to be debt-free faster than you’ve ever thought possible. You can do it!

Be aware of this before exploring these techniques. Also, consult with your lender before implementing any strategy because certain loans come with penalties for extra or untimely installments.

1. You can make biweekly installments.

You can submit weekly half-payments instead of monthly installments to repay your loan.

The advantages of this method can be described as twofold:

  • First, your payments will be made frequently, meaning you will pay less interest.
  • There will be 26 payments per year. That’s one additional full payment over the same day, thus reducing the term of your mortgage by a few months or even several years. For example, if you opt for this option using a mortgage with 30 years, you may reduce the time to just 26 years!

2. You can round your monthly installments

Make your monthly installments up to $50, which is the most straightforward way of reducing the length of your loan. If, for instance, your auto loan costs you $200 per month, round the total to $250. This isn’t enough to have a noticeable impact on your spending. However, it is sufficient to take several months off your loan term. It will also reduce the amount you pay in the cost of interest.

If you want to make a more considerable effect, consider increasing your monthly payments by $100.

3. Each year

If the idea of biweekly payment seems overwhelming, but you are interested in paying an extra payment yearly, you could achieve this same objective by agreeing to make just one additional annual payment. In this way, you’ll only feel the pinch once per year. You’ll be able to reduce the term of your loan by months or even many years. Utilize a bonus from your job or tax refund as other windfalls to help you make your once-a-year payments.

A different method to pay an extra installment could be spreading it throughout the year. For example, divide the monthly amount by 12, then add the amount on top of your monthly payment for the entire year. This will result in a total additional charge throughout the period, not feeling any pressure.

4. Refinance

One of the most effective ways to repay your loan earlier is refinancing. If interest rates have decreased when you took out the loan or your credit score has increased dramatically, this could be an ideal option. Contact Horizon to ask about refinancing. Horizon can assist even if you have a loan already with us.

It is important to remember that refinancing is the best option for sense when it helps to pay off the credit faster. This can be accomplished through extending the term of your loan. You might be able to manage this due to your low interest. A different approach to achieve the same aim is to maintain the loan duration unaffected using lower monthly payments using one of the earlier strategies to cut down on the total life of the loan.

5. Make more money and apply every extra dollar towards the credit

One way to extend the length of your loan is to concentrate on earning more cash in the hopes of making more payments. For example, you could consider selling items via Amazon or eBay to reduce impulse purchases and save money on your loan. You could also consider doing a side business during the weekends and holidays to earn an extra income. Finding work that gives more than $200 per month could significantly impact the amount you can borrow.

Get your loan back with one or two strategies to reduce its length and charge less interest rate. You should get the most of your cash!

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