Student loan debt has become a major problem in the United States in recent years. Many college graduates leave school with more than $20,000 in debt. In some cases, this leads them to dip into their emergency funds to help make payments. It can also prevent them from creating one altogether. Paying off this debt faster than normal is a good way to keep the amount of interest accrued down.
Make Payments While In School
Although it may not be possible for everyone, making payments while in school can help you pay down your debt faster, according to Wise Bread. Even though you aren’t required to make payments, interest is still accrued. Making payments while still studying can help reduce the amount of interest that you take on. However, there may be prepayment penalties on some of your loans. It is important to check with your lender to make sure you won’t be charged any fees.
Consolidate Your Loans
Another way to help pay your student debt faster is to consolidate your loans. This lumps all your loans into one so making your monthly payments is much more convenient. This may be smart if your credit has improved from the time your first took out your loans. If it has, you may qualify for a better interest rate, which would lower your payment.
Enroll In Auto-Debit
Having your payment automatically deducted from your bank account may be beneficial. This ensures that you make the payment each month. Some lenders may also offer a small discount each month if you choose auto-debit.
Make Bi-Weekly Payments
If possible, making bi-weekly payments instead of monthly ones can help pay debt faster, according to Investopedia. This method is often used for mortgages. It can potentially help reduce your repayment period by a number of years. Instead of making 12 payments a year, you’d be making 26. This allows less time for interest to accrue. With less interest, the overall cost of your loans will be less. However, if you receive a discount for monthly automatic debit you may not want to make bi-weekly payments.…
When you are applying for a payday loan, it is extremely important that you know and also understand all of the different terminology that is involved with a loan. If you are unsure of the different terminology, you could quickly find yourself in over your head and facing some extreme problems. However, it is also advised that you look up any phrases that you do not know to ensure that you make the correct decision and also ensure that you are fully aware of what your rights as well as responsibilities really are.
Borrower – During the payday loan application process this is yourself, you are considered the borrower. However, unlike a traditional loan that can have numerous borrowers, a payday loan only has a single borrower. While traditional loans can have a borrower and a co-borrower a payday loan involving only a single borrower makes just the person applying for the loan responsible for the obligation.
Lender – This is the company that you are working with for the payday loan. This could be either a company in your local area or it could be a company that is located on the internet. Regardless of where the lender is located, there will typically be only a single lender for the loan.
Interest Rate – This is also called the APR or Annual Percentage Rate. This is the amount that you are charged for the loan. The longer the loan is out the more you will pay in interest.
Principal – This is the actual amount of money that is borrowed. This will not include any interest charges, or service charges. The principal amount is the actual amount of money that you personally receive as funds from the loan.
Rollover – This is a term that is used to describe renewing the loan. If you are interested in simply paying the interest not actually paying the entire loan off when it is due then you are rolling over the loan.
As you can see there are several key terms that are very important to not only know, but also to understand. Because of the confusion and at times complicating manner that can surround payday loans it is extremely important to fully understand what you are doing in order to actually make wise financial decisions. If you are ever working with a payday lender that is using terms that you do not understand it is very important that you speak to them to find out exactly what they are saying.
If you are ever unsure what you are getting yourself into then it is absolutely critical to do the necessary research. Understanding a payday loan and all of the terminology will make it much easier for you to always ensure that you are proceeding along the correct financial path. Typically speaking if you are ever completely confused about what is going on you should answer all of your questions fully before finishing the loan. It is never a wise idea to obtain a payday loan if you are confused about any of the terms that are being used. This could find you quickly facing an extreme problem that is not easy to solve.…