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9 Tips To Help You Pay Back Your Loans On Time

Paying back loans on time can be difficult. Whether you’ve hit financial turbulence or the original terms of the loan weren’t favorable, to begin with, it’s often easy to find yourself in a loan repayment trap whereby you’re unable to make repayments and they simply stack up unabated. It doesn’t have to be this way, though. Whether you’re paying back mortgage loans you’ve acquired on the property or you’re looking to make repayments on personal loans, here are 9 tips to help you pay back your loans on time.

1. Take stock of your loans

Being fully honest with yourself is the first step to managing to pay back your loans on time. To do this, sit down with your bank accounts and comb them to make sure you know exactly what loans you have and which ones you need to pay back imminently. Don’t leave any out; even loans that hide as standing orders or direct debits should be taken into account. Once you’ve done this, you should have a better picture of your overall financial health, too.

2. Create a budget

After you know what loans you have, the next step is to create a budget for yourself. Your new budget should supersede any older budgets you’ve created and should take all of the loans you’ve just identified into account. Consider the minimum payment you need to make on those loans and incorporate it into your budget. You should now have a more accurate picture of what you should be spending each month, thus potentially allowing you to take greater control of your spending.

3. Make early repayments

Loan companies love it when you make early repayments on your loans (assuming, of course, that your contract allows you to do so). Making early repayments means you’re able to pay the loan off quicker, which means you’ll also potentially avoid interest, so many loan companies won’t allow you to do this. However, if you can, you should try to cut down the amount on your loan as quickly as possible. Of course, this is easier said than done and may depend on your circumstances.

4. Prioritise higher-interest loans

Loans have varying interest rates, so it makes sense that you should prioritize the loans that are higher interest. In the long run, you’ll be paying more for that loan than you will for the others, so make sure you’re pushing it to the forefront. This shouldn’t be done at the expense of other loans, of course. Examine each loan to see what the interest rate on it is, then make sure that if you do have to miss a loan payment in a month, it’s not the one with the higher rate.

5. Make savings elsewhere

As part of creating your budget, you should be looking to make savings elsewhere in your financial life. This could include ditching your car in favor of cycling or public transport, for example, or it could mean cooking more meals at home instead of eating out or getting takeaway. Only you will know exactly where you can make savings, but what’s important is that when you’re making your budget considerations, you incorporate potential savings.

6. Talk to your lender

If you find yourself unable to make timely repayments on your loan, then it’s important that you reach out to your lender and discuss this matter with them. It might feel embarrassing at first; nobody wants to admit that they’re struggling financially, after all. However, lenders will deal with people who are struggling with repayments all the time, and they’ll likely have protocols in place to help or mitigate the damage. Talking to them is always better than hiding it from them.

7. Seek financial advice

There are plenty of services out there that offer free financial advice and help if you’re struggling to pay back a loan. Citizens Advice and National Debtline are great places to go; simply explain your financial situation to them and they’ll try to help you come up with a solution that will help you get out of debt (or at least alleviate the trouble you’re in somewhat). You could also look to friends and family for any assistance they can offer with your loan.

8. Consider freezing your payments

Many loans will allow you to freeze repayments for a certain period of time so that you can sort out your finances. However, it’s worth remembering that in many cases, interest on these loans will continue to build up, so you might want to think about whether this is your best option (or find out whether interest will keep building up in your particular case). Check the terms of your loan to see how long they’ll allow you to freeze because it might be a significant period of time.

9. Consolidate your debt

In many cases, a debt consolidation loan could be the answer to your woes. Debt consolidation loans help you to put all of your repayments in one place; the idea is that you use the amount to pay off all of your loans at once, then make repayments only to the consolidation loan provider. This isn’t an appropriate solution in all circumstances; if you’re struggling to make repayments, a consolidation loan won’t take that away, so you’ll still have to repay the loan. It just might be on more favorable terms than it originally was.

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