Making the decision to take a more aggressive approach towards paying off your student loans can have some seriously positive benefits, but same as any other repayment plan, it involves some strategy. Think about how you can make this happen and determine if the timing is right to rearrange not only your loan terms but potentially your overall budget as well. Do your research and investigate different approaches to take so that you can reach your goal in a way that feels authentic to you and compliments your current financial situation?
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Consolidation and Refinancing
One of the most common ways to reduce your monthly payment is to consider debt consolidation and refinancing. If you have good credit, better than when your loan originated, and a steady job, this is a way to pay off your student loans fast without having to make extra payments. There is a guide to help you understand your options and figure out the best choice for you when it comes to student loan consolidation and what borrowers need to know.
A huge perk to this plan is saving on interest. By lowering your rate and potentially decreasing your loan term you ensure that you are paying more towards principle monthly and lowering the total amount that you pay simply towards interest, which of course increases with time. This is where your financial history and credit standing will have an impact. If you have a favorable rate and good history tied to your name, now could be the right time, if you are still building up towards that goal, consider waiting until you can present as the most attractive candidate possible.
Check for Discounts
In some instances, a tactic like simply enrolling in auto-pay can help you get your debt paid down quicker. Some loan servicers offer a discount on interest rates if you allow them to automatically deduct payment from your bank account. While this is an example that does not yield extraordinary results on its own, money saved is money saved and combined with other courses of action over time the savings can make a difference.
Making bi-weekly payments does not offer you any tangible discounts, it does however trick you into making an extra payment annually which shaves time off your repayment schedule and dollars off your interest costs. There are tools available online such as a biweekly student loan payment calculator that you can play around with to see what kinds of estimated savings you can expect with this technique.
Using found money is another awesome trick. A financial windfall of any amount that you were not expecting counts as found money. If you make the commitment to allocate any of these funds towards your student loan payments, you will certainly experience overall savings. Setting up rules such as this for yourself also lowers the temptation to overspend when unexpected money comes your way. If you have predetermined that these funds will go towards your student loans, the question as to where else you could spend the money is eliminated.
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