3 Ways You Can Clear Off Your Debts Or Loans Easily

If you have recently taken out a loan to pursue higher studies, purchase a house, or start a business, you should start thinking about repaying your loan within the stipulated time. This is because the repayment amount will begin to increase as the interest accumulates, and you might have to pay an extensive penalty if you default on your payments.

When taking out a loan, you should always consider the interest that you will have to pay. Depending on the tenure of the loan, the total amount of interest should also be calculated.

If you are looking to manage your payments and ensure your financial future, here are 3 ways to clear off your debts or loans easily.

1. Taking a personal loan at a lower interest rate

Often, student loans or credit card debts may have a higher interest rate compared to a personal loan. You can consider taking out a personal loan or a short term loan to pay off your credit card debt or your student loan. It is important to note that the interest rates of these short term loans may be less compared to credit card debt interest rates. The same applies to student loans and other similar loans.

Thus, you can reduce your overall debt burden by taking out a personal loan and repaying all of your current loans. However, when taking out a personal loan, you should ensure that the interest rate for the personal loan ranges between 8% to 10% per year and that it is used to pay off loans with interest rates of at least 20% or higher.

2. Pay off loans with higher interest rates first

If you have multiple loans to pay off, start by focusing on the loans with high-interest rates. Paying such loans first can also reduce your overall debt burden, making it easier to repay your other credits in the future. However, before doing so, you should check the loan tenures as well.

Strange as it might sound, some loans actually have a penalty for early repayment. So, be sure you are not clearing those debts too early, and paying extra for it. You should also evaluate the interest payable and the loan tenure before repaying your higher-interest loans.

3. Check if you can consolidate all your loans into a single plan.

If you have racked up a considerable debt and multiple loans, you can opt for a consolidation plan. This is applicable if your loan value exceeds up to 12 times your annual income.

Known as a debt consolidation plan, you can speak to a list of licensed moneylenders and choose one with the best terms for you. The licensed moneylender will then repay all of your debts and consolidate them into a single repayment scheme. You will then make monthly payments to the licensed moneylender, at a lower monthly repayment cost and with a lower interest rate.

Thus, by taking advantage of the numerous loan repayment plans, you can begin to repay the loans that you currently have and be free of debt. However, you should consider the options above so that you can make the best financial decision. Most importantly, always look to repay your loans within the stipulated time.

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