Getting a personal loan can be very helpful in a number of situations, but you will need to know how to avoid spending more than necessary. These loans can be quite costly if you make certain common mistakes. This article will help you get the information you need to avoid paying a ton of extra money on your next loan. Some of these tips may be pretty simple, but they are still very effective when it comes to saving money.
Pay Your Loan Back with Your Savings
If you currently have any loans you still need to pay off, you should consider using your savings to do so. Before you do this you will want to look into any fees you might incur. There is a good chance that your lender will charge you something if you are repaying early.
Get Another Loan
Those who are unable to repay their loan with savings should look into getting a second loan to pay off the first. This can be a very effective way of getting out of debt with minimal additional charges and money spent. Take some time to find out if you can get a lower interest rate so you will have an easier time paying back the money you owe. Those who have improved their credit recently should try doing this.
Reduce the Loan’s Term
You can also try negotiating with the lender for a shorter loan term. This could significantly reduce the amount of interest you have to pay, which will save you a lot of money. It could be enough for you to pay your loan back earlier than you thought possible. Not all lenders will be open to doing this, but it is at least worth a try. Just make sure that you will be able to pay the loan back on time.
Lodging a Complaint About Early Repayment Fees
If you feel as though the lender has overcharged you for paying back the loan early, you will want to speak with them first. Those who haven’t gotten anywhere with doing this should contact the Financial Ombudsman Service right away. Sometimes lenders try to charge more than what was previously agreed upon for early repayment. If you find yourself in this situation, you shouldn’t let the lender get away with such unethical behaviour.
Get a Debt Consolidation Loans
Sometimes a debt consolidation loan is the right option when you have multiple debts that you want to make more manageable. These loans can actually be quite difficult to acquire, but it is an option that you should look into. The lower interest rate that you could get will make it a lot easier for you to pay off your debts as quickly as possible. You will most likely have to use your home as collateral for the loan, so there is a lot of risk involved. Make sure that you have gone through all other options before choosing this one. It can be very helpful, but it is a last resort.
Using Credit Cards to Repay Your Loans
Another option that you have when it comes to repaying your loans is to use a credit card. If you are seriously considering this option, you should look for a card that offers 0% interest for the first year. These cards can make it possible for you to repay the money you owe without having to pay any interest at all. It will depend on what your credit limit is like, which is ultimately determined by your credit rating. This isn’t an option that will work for everyone, but it can be effective for some.