Student loans have been one of the most critiqued financial decisions in the world. Although these loans can hardly be avoided, there are ways to settle them more smoothly. Let us understand the strategies to fight off student loans with minimal effort and maximum success.
Look out for extra payments
Lenders do not charge over the prepayment or extra payment of student loans. You can make added payments at any time of the month. You are also allowed to pay additional money to your payments. You will be saving a lot of interest in both the circumstances. However, lenders can apply the added amount for the next instalment.
Think about refinancing
Refinancing is a tried and tested method to clear off student debts faster without extra payments. You can apply for refinancing if your credit score is on the higher side of 600s. A stable income source and a good credit history are also important for refinancing student loans. You are not eligible for refinancing if you have been utilizing federal loan benefits.
With a refinancing, you could cover different student debts through a single private loan. It may not only have a lower interest rate but also has a shorter run. You will be paying extra payments but the loan will settle faster and the interest money will get saved.
Activate auto pay
When you allow lenders to take away payments from bank accounts automatically, then they normally offer a quarter-point interest rate discount. Even though you won’t be saving substantial money from the discounts yet, they will help in faster debt settlement.
Try fortnightly payments
This strategy will help you make extra payments without any hassle. You will be paying equal amounts of payments two times in a month.
Settle the capitalized interest first
You should settle interest accrued during your school and grace period. It will not speed up the process, but you will be left with a smaller balance to pay. You can either pay the debt while you are in school or pay a lump sum amount before the grace period gets over.
Make sure that you have a fool-proof strategy for student loans, or it could have a bad impact on your credit score and financial stability.
You should only consider paying back extra on your student loan if you’re in a strong enough financial position to do so. Otherwise you could find yourself struggling to make ends meet. If you do have that unexpected extra bill which your usual salary won’t cover for this month, then applying for an instalment loan could be an option for you. This way, you could have access to emergency funds when you need it and pay back over a longer period of time up to six months. During this time, you should be mindful of the repayments due and make sure you’re able to pay this back, plus any interest accrued.