Ways to Save on Loans
When it comes to saving money, we often think of cutting back on our everyday expenses. Fewer dinners out, streaming movies instead of going out to the movies, or lowering our cell phone bills. But did you know one of the best ways to free up significant funds is by looking at the loans you pay each month?
It’s true. Your loan payments, whether home loans, credit cards or car payments, usually make up the largest expenses you pay each month. And they often provide the greatest opportunities to save big each month.
Save on Your Current Loans
When it comes to saving money on your current loans, lowering your interest rate is probably the first thing that comes to mind. But what if rates aren’t lower now than when you initially financed your loan? There are still several ways to save big. Let’s see how:
Loan Terms: The length of time you have to repay your loan greatly impacts your monthly payment. The longer the term, the lower the monthly payment and vice versa. Extending the payment does cause you to pay more interest over the life of the loan. However, if you are in need of more funds now, it does provide a way to lower your monthly payments immediately.
Note: There are some restrictions on extending loan terms for different types of loans. These restrictions are to prevent you from becoming upside-down on your loan (i.e. owing more than your car is worth).
Loan Type: Unsecured Loans (those without collateral, i.e. credit cards and personal loans) often have higher interest rates because they carry more risk for the lender. However, you may have the option to switch your unsecured loan to a secured loan if you put something up as collateral (i.e. your vehicle). This will allow you to qualify for the lower rates of a secured loan.
Consolidate Loans: You may have several different loans you are able to consolidate into one single loan. For example, you could take several high-interest credit cards and consolidate them into a Personal Loan. This helps eliminate the excess interest you pay on high-interest credit cards and provides you with a single, manageable monthly payment.
In addition to the example above, you also have the option of a Home Equity Loan. This type of loan allows you to use the equity in your home to consolidate high-interest loans into a single, lower-rate loan. Home Equity Loans also typically have longer repayment terms; helping to further lower your monthly payments.
Financial Access Federal Credit Union is Here to Help!
Your loan payments usually make up your largest monthly expenses. Yet, they also provide the greatest opportunity to save! We’re ready to help you put more money back in your pocket.
Each individual’s financial situation is unique and readers can talk with a credit union representative at 941-748-7704 ext. 125 when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.
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