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Smart Techniques to Repay Loans

We’ve all been there; you need funds in a pinch and you don’t have cash on hand or saved in a bank account. What do you do? Would you bite the bullet and take out a personal loan? At first look, it might not seem like an ideal option, but a personal loan can actually help you get out of a bind, especially in case of emergencies.

If you do your homework and take care not to miss a payment, a personal loan can be easily managed and can even help you improve your credit score. Below we list down smart ways to handle a personal loan, so you won’t find yourself in a tight spot when it comes time for repayment.

Go extra

If you want to get out of debt as early as possible, the simplest way to do so is to go extra by paying a little more than you’re supposed to whenever possible. This might seem like a piece of cake but it requires some discipline and budgeting on your part. Remember to inform your personal loan provider to apply your extra payment to the principal to avoid confusion, though.

Different providers may have different processes when it comes to this, so it’s best to ask them beforehand so they can contact you if any adjustments need to be done. Try adding one or two extra monthly payments in a year to start and take it from there.

Send payments more frequently

If you feel that the monthly installments are a burden, you can try paying every two weeks instead of every month. This helps because, although you pay twice a month, you only pay half of the actual amount each time so you won’t have to fork out large amounts of cash each month. 

Here’s where the magic lies in bi-monthly payments: since there are 52 weeks in a year, bi-monthly payments result in a total of 13 installment payments (26 payments twice amount of half the monthly installment). On the other hand, if you were to just pay your monthly installments normally, you’ll only have made 12 total installment payments in a year. That’s one extra installment payment in a year. It may seem like too little a difference, but this will lead to dramatic savings as you pay off your personal loan through the years. You don’t have to worry too much about interest accumulating, either, because frequent payments mean they are applied more often.

Prioritize variable-rate loans

Although variable-rate loans generally have a lower rate that fixed-rate loans, this can change fast and when you least expect it. Depending on the economy of the current market you’re in, interest rates can rise suddenly and can lead to ballooning monthly installments that can catch you off guard. Pay off variable-rate loans first or consider converting them to fixed-rate ones. Talk to your personal loan provider to learn more about your options.


This works best for older loans that you’ve been paying off for years. For easier and more convenient repayment, you can consolidate them into one monthly payment. Aside from making them easier to pay, consolidated loans usually offer a rate lower than what you’re paying on the individual loans. Even if you don’t get a better rate when you consolidate, making one payment is always easier than juggling multiple of them in a month.

Refinance your personal loan

Often, you can get a lower rate when you refinance your loan, but how does this work? Basically, you apply for a loan to cover the amount you still owe on your current personal loan. Once you get approved, you use the funds you get from the new loan to repay the old one. You’ll still owe the same amount, but you’ll save money under better terms, lower fees, or reduced interest.

Consider your current financial situation and determine if refinancing will improve it. Compare your expenses with your current loan to that of the new one and see if you’d be better off with refinancing. Take note of one-time setup fees and specific loan features important to you and take those into consideration, too. In short, do the research and consider what you can and can’t do with both loans before signing a contract.

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Remember these techniques the next time you’re planning on taking out a personal loan so that you know your options and can manage your debt responsibly. A personal loan can be a valuable financial tool if you know how to manage it. Borrow with confidence and never mind the myths about loans. There’s nothing to be afraid of if you know what you’re getting into.

Compare the best short-term lending providers via GoBear today.

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