When it comes to paying for a new car or a new holiday, it can be difficult to come up with the money straight away. Loans are there so that you can borrow money in order to pay for something in one lump sum which you can then pay back in smaller instalments throughout the year. Some loans incur more interest than others and other loans; such as mortgages, are so large that it will take years for you to pay back the money. However loans are a part of everyday life and they help us to afford things we would never normally be able to.
The important thing to remember is, how can you keep on track when repaying a loan? Repayments are important as you will need to show that you are actively working to repay the loan in full. If you do not meet one or more repayments, fines may occur or you may lose the thing (if it is an object of a monetary value) that you borrowed the money for in the first place. Here we have provide d a few useful tips for ensuring that you don’t fall into difficulties when repaying your loans.
Set up a Direct Debit
Set up a direct debit for the payment. The repayments may be an optional repayment or it may come out of one of your accounts at a certain time. Either way you want to try and set up a direct debit that automatically takes a set amount of money out for the repayment, and you want to set it up for one or two days after payday. That way you won’t have had a chance to spend any of your earnings from payday without making your repayment first. Prioritize!
Give yourself a weekly/monthly budget
By allocating yourself a certain amount every week or month, you give yourself a good ‘safety’ net for if you ever want to make any voluntary repayments on the loan, or an emergency crops up and you need to spend any extra cash. If you set yourself a budget that is slightly below your earnings, you get that safety net, which can become a real help if you have a car and require sudden maintenance or something similar. It pays to be properly prepared.
Reel in the Leisurely Activities!
If you’ve recently taken out a loan, small time leisurely activities may have to take a back seat for now. You’ll want to pay off the loan as soon as possible, otherwise the longer it takes, the longer you have that debt hanging over your head and over time it can get extremely stressful. Live frugally until you make steady progress in your repayments and then you can gradually start to reward yourself again. But don’t go cold turkey! Allow yourself a little fun.
Avoid Paying for things on Card
Loans are a great way of treating yourself, whether it is with a new car or a holiday or a present for someone else. But it is important that you are able to make the loan re-payments in time otherwise you may find yourself in an even more difficult situation than you were previously. The Interest on ‘quick and easy’ loans is often a lot more than initially thought and so you can get bitten quite badly if you don’t pay it back soon enough. Plus if you fail to make a re-payment, your credit score will be affected and this can reduce your chances for getting future loans as well as affect a whole bunch of other things. In short, getting a loan is all fine and good but make sure you stick to the repayments and try to be strict with your budget!
Article provided by Solution Loans, a technology led finance-broker that aims to provide a broad range of personal finance products – and the information / tools to help you choose the right type of credit.