Reducing Your Loan Interest Payments
Monday, November 06, 2006
If you have a long-term loan with high interest, then you might
find yourself paying almost as much in interest payments as you
are towards the money you borrowed. If this is the case, then
you should look at ways to reduce those loan interest payments.
Reducing your loan interest payments will help you to pay off
your loan more quickly, and thereby save yourself money. Here
are some tips on how to reduce your loan interest payments.
Change your loan
One way to reduce your interest payments is to swap to a
different loan company. Refinancing your loan with another
company might seem like a lot of work, but if you can get a
lower interest rate you could save a lot of money. Shop around
and compare loan prices to see if you can get a better deal
than you are now. Even if you reduce your APR by 1 or 2%, you
could save yourself a significant amount of money.
Bi weekly payment
Another method for reducing loan costs is to start paying
bi-weekly. Instead of paying your monthly amount, pay half of
your monthly amount every two weeks. There are 4.3 weeks in
every month, so you will find that you pay your 12 months'
payment in just 11 months. This will leave you one whole month
of extra payments, thereby reducing your loan amount and
interest. This method can save you a lot of money. If your loan
company will not accept prepayment every two weeks, then just
pay 13/12 of your monthly payment each month, thereby
accomplishing the same as bi weekly payments. Although some
loan companies charge for overpayment, most lenders will be
able to accommodate this payment method.
Early settlement
Another way to reduce your interest payments is to pay off
larger parts of your loan at once. This will reduce the total
amount you owe, and therefore reduce your interest payments.
Some lenders charge for early settlement, although many allow
you to pay back up to a certain amount before charges take
place. Even the smallest extra payment can help to reduce your
loan interest payments and save you money. The more you pay,
the quicker your loan will be paid off and the more money you
will save.
Using credit cards
To reduce your interest payments on a loan you can take
advantage of credit card 0% offers. If you can find a card that
has 0% for 6 months, then use this card to pay off part of your
loan. Although you will pay much higher interest once this time
is up, if you can pay back the credit card in this time you will
save money on interest payments.
Secured loans
Although they are more risky, secured loans generally have
lower interest payments. If you refinance to a secured loan,
you could save a lot in interest payments. However, you need to
make sure that you can afford the payments, as otherwise you
risk losing your home. If you follow at least one of these
steps, you will reduce your interest payments and save yourself
money.
About The Author: Peter Kenny is a writer for The Thrifty Scot,
please visit us at http://www.loanwize.co.uk and
http://www.thriftyscot.co.uk/Loans/
posted by Dennis Cheesman @ 5:21 AM,
