Top Tips On How You Can Repay Your Loans Faster!

Saturday, May 29, 2021

 Loans are something that many people see as bad debt. They are an extra temptation into purchases that we don't always need. However, some people have loans to make their situation better, like starting up a business. Some people need a loan to pay for urgent expenses. Loans are relatively easy to get. There are also instant approval credit cards which can also lead to further debt. Now, the biggest challenge with loans is repaying them without being overcome with interest. Here are some of the best ways to quickly repay a loan, so you don't have the debt lingering for longer than you need!

What Are Loans?

There are many types of loan. Payday loans and student loans are the most common ones and ones you may have yourself. There is also buy now pay later schemes, which most online fashion retailers offer now. Yes, that is a type of loan too. Simply, a loan is money that you borrow intending to pay back. In this post, we will be talking about short term and long term loans. These tips can apply to both types of loans, as you'll need to pay them back at some point!

Not All Debt Is Bad

It is debated whether you should save your money or pay off your debts. Most of the time, it's worth paying off your debts rather than saving. However, not all debt is bad. Students need to take out a loan for their education. Although apprenticeships are available to give you a similar qualification and you don't have to pay anything back. 

There is good and bad debt. Bad debts are usually loans on cars and clothing. This is where Klana catches a lot of people out! Good debts are things like mortgages, education and business loans for startups. Whichever one you may have, don't feel bad. Everyone will take out some form of loan in their lifetime. You shouldn't feel like you're doing something wrong for taking out a loan to make ends meet. If you want a flashy car and are willing to pay back the interest, why shouldn't you go for it? Either way, it's a loan you need to pay back at some point!

Why You Should Pay Back Your Loans

Sometimes it can feel like you're drowning in student loans, car loans or personal loans. It can be mentally draining to know that you have so many loans that you have little left from your pay check. I felt so much relief when I finished paying off my loan that ran for 2 years. I felt confident to pursue other things and save towards my goals. Here are some compelling reasons why you should start paying off your loans! 

  • There is less interest that you have to pay. The loan won't be cheaper than what you started with, but you won't have to pay back as much as if you left it another year! 
  • You can start saving for the things you want. Without monthly payments needing to be made, you can start saving for bigger, better things!
  • It can feel like a weight has been lifted as now you don't have any debt. All the money you make is yours, and you don't owe anyone a penny! 

Pay Over Your Minimum Requirement

It can be tempting to just pay the minimum monthly repayment. It's what you've planned for, and it's all you need to pay. However, rounding up your monthly payment or paying an extra £20 adds up over time. If your monthly payment was £56.40, you could round up to £100. That way, you can pay off your loans faster without breaking the bank. Rounding up your total doesn't have to cost the earth. An extra £43.60 can easily be found if you switch up your expenses and cut down on spending. 

You could put off spending on fashion or travel while you sort out your loans. Early loan repayment means a lower amount of interest paid, making the loan cheaper overall. The sooner you pay it off by rounding up your amounts means, the quicker you stop paying £100 a month to repay a loan. Rounding up can be an easier way to pay off a loan than some of the other suggestions. Your extra repayment could be the equivalent of a meal out, which is doable for more people.

Create A Budget & Stick To It

Budgeting can be overrated, but it's one of the best ways to keep control of your finances and pay off debt. So many of us receive our monthly pay checks and wonder where all the money is going. Tracking where your income goes will help you focus and pay your loan faster. To create your budget, you need to look at income, regular bill payments and luxury purchases. Write down all of the bill payments you have in a month and take it away from your income. Then, work out what luxury expenses you have. It could be clothes, meals out or even subscriptions. Take that away from the previous figure, and you'll have your account's closing balance. 

It's always surprising you see how many unnecessary purchases you may have. Now is the chance to cut them down and cancel things. You should include your minimum loan repayment in the budget. Anything extra at the end of the month could also be contributed, helping you pay off your loan faster!

Avoid Using Credit Cards

Credit cards are helpful for tight months and building a credit score. Most banks offer credit cards alongside personal loans. However, having a credit card can influence impulsive spending habits, which eat into your loan repayment funds. You may even need a loan to repay the credit you've used. Credit cards aren't something you need to completely get rid of. You may enjoy cashback or discounts when you use your credit card, and there are some other benefits to using them. However, you don't want to be creating more debt to repay when you're trying to remove other debt. 

Remove your credit cards from online shopping sites. It's easy to click buy now when your card details are already there. The websites that may hold your card details include Amazon, PayPal and shopping websites. It can help you stay within your budget and reduces the chance of impulse spending. 

Reconsider Your Spending Habits

As mentioned before, budgets help you to monitor your spending habits. I prefer to track my spending in an excel spreadsheet, but you can use a financial planner or bullet journal. When looking at your spending habits, you should look at past bank statements. Highlight any luxury items you have purchased, including clothes, home décor and beauty items. There are some easy ways to reduce your spending habits and make them better for your budget. When you save more, you can repay your loan back faster! 

  • Swap to own-brand alternatives, which are usually cheaper
  • Treat yourself to one luxury a month
  • Start a side hustle and use those funds on your shopping habits
  • Cut down on your spending altogether

Find More Ways To Earn

The pandemic has been a shock to everyone. It's taught me that money and jobs are never secure. Unfortunately, repayments and bills still needed to be paid, so people needed to find another source of income to support themselves. If you're able to contribute more towards your repayments, you can pay it off faster. There are so many ways to increase your income, whether that be online or getting another job. I personally made a lot of money selling my old items, blogging and from market research. Any money that you earn from a side hustle, you can put towards your loan. I have a separate account for all of my side hustle income. You should keep track of your earnings as you may be liable to pay tax on it. If you earn over £1000 in a tax year, you need to file a tax return. 

Loans aren't a bad thing, and many of us turn to them to help us at some point. Student loans are one of the biggest loans that many of us will face in our lifetimes. Paying off a large loan can be fulfilling, especially when you're able to do it by yourself. While it may take a while to reach that goal, it is possible to do! What tips do you have for paying off loans faster? I'd love to hear your success stories and how you managed to pay off your debt.

About the guest writer

Magdalene is a fashion and lifestyle blogger. When she is not writing, she is either adding more fashion pieces to her closet or travelling. You can follow her on Instagram: @enimhienomo

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  1. These are some fab tips for paying back debt quicker! Something that really helped me was getting rid of subscriptions and contacting my debt repayment agencies x

  2. Some brilliant methods to repay loans/debts off quicker! I'm currently not in any debt right now as I never go over my means in terms of what I spend etc, it's one thing I don't need to worry about as of yet x

    Lucy |

  3. I don't have student loan to repay, but my middle sister does and this will be such a great post for her, so I will make sure to share it with her. The tips you give are great, I might even apply them for my credit card repayments! x

  4. These are great tips! I haven't really ever taken out loans, apart from my student one, which I barely even notice getting repayed as it comes straight out of my wage. Like you said, not all loans are bad!

    Thanks for sharing :)
    Aimsy xoxo
    Aimsy’s Antics

  5. Fab guest post! I started budgeting and documenting my finances earlier this year and it's already really helped me to identify where my money is going and work towards better financial decisions in the future x

  6. These are great suggestions for those trying to stretch their dollars from one payday to another and certainly be helpful. Thanks for sharing.

  7. What a brilliant post with so many great ideas on paying back a loan sooner xx

  8. These are great tips Em! I don't have any loans to repay and I have never taken out any loans before but these are spot on. I have never even considered some of them before. I know people who have taken loans and I would be more happy to share this with them. x

  9. This is such an informative post and a great idea for guest content as it fits in so well with your blog. I don't really hear bloggers talking about loans but it's great that we're being more open and honest, talking about different aspects of money. I don't have any loans but if I did, I'd definitely take some of these tips onboard x

  10. Thank you for sharing these tips. It can be soo overwhelming when it comes to money, where to pay it back and how you'll get it all sorted!


  11. These are such good tips! I'm guilty of a bit of credit card debt and paying over the minimum and using my website to pay it off is SO helpful! xx

    mia //