How to Pay Off Loans Fast

If you are discouraged by the amount you owe on your loans, set a goal to pay off your loans quickly. Whether you owe money for your education, car, business or house, accelerate your repayment and get yourself out of debt. After you have paid off the loan, you can use your surplus income for other purposes, such as saving for your retirement, going on a vacation or giving to people in need. If you have multiple loans you want to pay off fast, start with the loan that has the highest interest rate for the best savings.

Instructions

1

Call your lender and ask if your loan has a prepayment penalty. If it does, it might be to your advantage to stick to the regular schedule, depending on how much the penalty is and how much you could save on interest if you were to pay it off early.

2

Pay down the loan with your savings. If the savings account is earning less interest than the loan is charging you, it is to your advantage to pay the loan instead of saving the money. You can then work on replenishing the savings account after paying off the loan. The exception is if you do not have any money or a credit card available for an emergency, in which case you should keep at least $1,000 on hand to cover emergency expenses.

3

Add an extra payment to your loan payment every month. Your monthly payment amount is just the minimum you are required to pay, and anything additional goes toward reducing the principal balance and helping you pay off the loan sooner.

4

Cut parts of your budget and put that savings directly toward your loan. For example, switch from premium cable that costs $80 per month to basic cable that only costs $30 and use the $50 savings to make an extra $50 loan payment every month.

5

Use your income tax refund check to make a huge extra loan payment every year.

6

Get a part-time job and use all of the income from that job to make extra loan payments.

7

Apply the full amount you were paying toward a loan as an extra payment on a different loan after you have paid the first loan off. For example, if you had been paying $200 a month for your college loans, add that amount to your car payment after you have paid off your college loans. For the best savings, focus on your loan with the highest interest rate first. If paying off a loan quickly is a better motivator for you, you could start with the loan with the lowest balance instead.