7 ways to pay off loan debt faster and save money
Being in debt can be an exceptionally stressful time – particularly if the debt you have comes bearing interest that you are struggling to pay. Financial worries are one of the biggest causes of stress in the UK, but it does not have to be that way. By taking a proactive approach to your finances, it is possible to stay on top of your incomings and outgoings to maintain good financial health.
One of the main ways you can improve your finances is by paying off any debt as soon as possible. But how can that be done? Here, at The Money Shop, we have highlighted 7 ways to pay off loan debt quickly so that you can save money. It is easier than you think.
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How to pay off payday loans faster
Here are our top tips for paying off payday loans faster. It can be a good idea to implement as many as possible as soon as possible for the quickest results, but just trying one or two at a time will help you reap some benefits.
1. Cut back on non-essential expenses
We are all guilty of buying things that we do not need. Often, we do so without much thought about how much difference it can make to our overall monthly expenditure. But trust us, those non-essential expenses really do start to add up. Look back at your bank statements and see where you have been shopping recently. Identify the shops that you go into where your non-essential expenses are made.
For a few months, try to stop going there or stop clicking on a shop’s webpage. If you can’t see certain products, the likelihood is that you won’t buy it. Or, if your non-essential expenses come from your weekly food shop – make a list and stick to it before you go grocery shopping. You’ll find it much easier to stay on the straight and narrow that way.
2. Make small, affordable repayments
When you have a payday loan that you need to pay off, making small affordable repayments is often one of the best ways to go. By slowly chipping away at the final amount, you are far more likely to pay it off rather than trying to save your money to pay it off in one big lump sum.
Because, the reality of the situation is, most of us are not very successful in ever saving that big lump sum. And those small repayments will slowly start to add up – especially when added to the savings you are making by cutting out non-essential expenses.
Additionally, making many smaller repayments also helps keep interest charges lower as you are not charged for an ever-growing amount. Instead, you are keeping the amount as low as possible, receiving much fewer interest charges as a result.
3. Look for sources of extra income
It may sound obvious, but trying to win another steady source of income that you can channel directly into paying off your loan can be hugely beneficial. And, it does not have to be lots to make a big difference. All it needs is for it to be regular enough for you to make those regular, affordable payments.
Again, it will mean that you are chipping away at that final loan amount, so it does not get larger over time through interest. When that occurs, debt can start to spiral out of control and become even more overwhelming. Getting a steady, short-term second income can stop that from ever happening.
4. Don’t take on another payday loan!
However, if you have struggled to keep your debt down, it can be really tempting to take out another loan to pay off the previous one. This is not advisable because you will more than likely have to take out another payday loan with a higher interest rate – meaning that you’ll end up paying more eventually anyway.
In fact, it can hugely exacerbate the problem when you are really trying your best to become debt-free. Look at making savings elsewhere instead and securing that second income. It may feel a little harder in the short term, but you’ll reap the rewards in the future.
5. Consider debt consolidation
Consolidating debt can be a hugely effective tool when it comes to paying off loans and becoming debt-free. Putting it all in one place, with one provider, makes it easier to manage and sometimes attracts a lower interest rate on the total amount.
It attracts a lower interest rate because the provider can offer it thanks to the final total amount being a larger one. When you have several debts dotted around, they are smaller – thus attracting higher interest rates. The result is that you pay more interest overall than necessary. By consolidating debt, you can benefit from minimising interest fees.
6. Seek expert financial help
Financial help from an expert does not have to be expensive. In fact, in many cases, it can actually be free. Many local authorities will have initiatives to help people better their financial help by providing expert advice – or websites like the Money Advice Service can be hugely helpful. They can direct you to individuals who will be able to point out ways that you can improve your financial situations – by highlighting ways you can make changes that can add up to a big difference.
Plus, when we talk to someone who listens, they will often give us a clear course to follow, which can help us feel so much better. Do not suffer in silence. Get help as and when you can. Often, stressing about financial worries can stop us from taking any remedial action that will truly make a difference. Talking to someone will often reduce your worry.
7. Know your rights and the rules around payday loans
Not all payday loan companies are reputable, like The Money Shop. If you have taken out a payday loan and you feel that your lender is taking advantage of your situation, it’s a good idea to swot up on your rights in terms of repayment.
Doing so will, again, help alleviate your stress and worry. Knowing where you stand legally is hugely beneficial as it helps remove the fear of the unknown of what may happen if you do not acquiesce to the requests or demands made on you by your lender. Again, it can be helpful to talk to a financial expert on the matter but do your own research to get to the crux of a problem as quickly as possible.