Got your loan approved? Well, congratulations!
Now that the funds are in to help you with your expenses, here’s where the hard part comes in – remember, every loan is a responsibility.
Failing to repay your loan on time or not budgeting enough money to repay your term loan regularly can cause debt to accumulate, especially since you will need to pay additional late interests and changes!
So how can you manage your finances realistically so you can pay off your loan on time fuss-free? Here are 4 simple tips you can use.
Do your budgeting and financial planning
If you’ve been feeling anxious about your financial situation as of late, financial planning might feel overly complicated and daunting. Many of us have been through that, and we understand.
If you do it one step at a time, it is actually pretty simple!
Start by finding out the outstanding loan amount for all your existing loans (check your latest repayment receipts or call your lender to check). Next, total up your loan repayment amount every month.
You can then start budgeting every month around this repayment, and align it with your monthly payday dates. If you’re struggling with this, consider trying the 50/30/20 budget rule – which suggests spending 50% of your take-home pay on essential expenses, 30% on other things you might want, and the remaining 20% on savings and debt repayments.
If the 20% of your take-home pay isn’t enough to help you manage your monthly term loan repayments, you may need to reduce the amount you spend on non-essential items, so you are able to repay your loan and have enough savings. If you find yourself ending up using all your take-home salary for loan repayment and expenses with barely any savings left, you may need to reduce your expenses and stick to a tight budget.
If you need any budgeting advice, reach out to us here and our experts will be more than happy to help!
Automate your debt and bill payments
Have you ever found yourself forgetting and missing bill repayment deadlines (as well as repayment dates for loans)? While it might have simply slipped your mind, it’s a very expensive mistake that might come with late charges and a black mark on your credit record, even if you’ve only taken cheap short term loans.
Why not simply automate your monthly bill repayments? You can set up GIRO payment options or scheduled card deductions from your bank account.
The best part? You can time this automated deduction according to when your salary comes in every month, so you can ensure you have sufficient funds in your account for the transaction to go through.
Top up or round up your term loan repayments
Have a little extra money on hand for the money from performance bonuses or freelance gigs?
Before you start thinking about splurging to reward yourself, if you are currently repaying off loans, consider using the extra cash to top up your loan installment repayment. This will help you clear off your debt more quickly, especially if you have short term loans which may have higher interest rates.
Not sure what extra amount to start with? Consider rounding up your installments instead of the stipulated amount of payment you are supposed to make.
For instance, if you need to pay $276.50 monthly, you can round it up to $300 and pay $300 instead, if you have the extra cash. Over time, you will end up reducing the period you need to otherwise take to repay your loan, which can leave you with a shining credit report and reduced stress from loan repayments!
With that said, keep in mind, however, that some lenders might penalise you for early repayment. Sometimes, lenders do this in order to make sure that they’re still earning a stipulated amount of money from the interest of your loan, in exchange for their service. So be sure to read all the fine print before you pay off your loan too early!
Make use of the option to refinance your term loan (if any)
Refinancing is when you revise the terms of your existing loan, whether with the same lender or with a different one entirely. Most of the time, this is done when the prevailing interest rates fall, and borrowers request to refinance in order to get better interest rates than the existing interest rate you currently have to pay for your loan.
The lender would then re-evaluate the borrower’s credit history and repayment status, before adjusting the loan terms such as interest rates or payment schedules. Doing so can help you save money.
If you’re juggling many lines of credit, repayment terms and deadlines, you can consider taking a debt consolidation loan, which helps you merge all your loan obligations into a single loan, so it is easier for you to manage your financial responsibilities.
If you’re looking to refinance your term loan, always make sure to read the fine print of your current loan before taking any action.
How can you get the best term loans?
With a simple plan and a little bit of discipline, managing a short term loan in Singapore can actually be simple.
If you are unsure of how to start, we are here to help. At LoanHere, we’re passionate about improving your quality of life by constructing a feasible financial plan for you.
We will also help you get the best long term personal loans and the cheapest short term loans by helping you compare loan quotes between the top licensed money lenders in Singapore. Get a loan quote with us now.
