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10 Ways to Cut Existing Loan Cost

Utilizing a certain strategy such as making an overpayment or moving the loan around, whether itق€™s a mortgage or a payday loan, you may actually be surprised by how much money you can save on the cost of your loan even if you have to pay extra for doing so. Here are ten potential ways to cut existing loan cost.

Payday Loan Consolidation

If payday loans were your loan of choice then it isnق€™t unusual for you to feel overwhelmed with the amount of money that you owe due to the high interest. It can be all too easy to fall into a pit of debt that is extremely difficult to get out of, and so a payday loan consolidation can give you the opportunity to shut down all of your payday loans and turn it into one lump sum owed. This will substantially decrease the amount of debt that you owe, and are perfect for those who took out more than one payday loan at one time.

Repay Your Loans With Savings

When it comes to installment loans it almost always is best to repay any outstanding loans that you have with your savings, as long as repayment charges arenق€™t very high. If you do in fact have a savings account that you can dip into then make sure that you pay down your most expensive loans first in order to save on interest costs. Even though it is very important to have an emergency fund, you will be able to save much more when you are debt free, and so when dealing with installment loan debt it is best to put off the idea of saving all your money until you are debt free.

Switch to Another Loan

If you donق€™t have any savings that you can dip into then you may want to look into the option of paying off your loan more cheaply with a different loan and in full. For instance, you can find a loan where youق€™ll find a shorter term, a lower rate and maybe even both. If you took out a three-year loan for $5,000 at an interest rate of 15%, you will owe about $1,240 of interest. However, if you are able to switch to a loan with an interest rate of say 10% then you will only have to pay $800 of interest, which is a $440 saving.

Be the Squeaky Wheelآ

Donق€™t be afraid to call your loan provider if you think you are getting overcharged for something, or generally arenق€™t satisfied with how they are treating you. You never know, you may have success at eliminating some fees that come with your loan such as an early repayment fee or a fee for switching loans. If you are still not satisfied after complaining then you can also take your complaint to the Financial Ombudsman Service.

Debt Consolidation Loanآ

There are loans out there that are specifically made to consolidate any type of loan debt that you have. This will allow you to merge all of your loans together. However, consolidation loans are now harder to get, and should be used as a last resort as they are usually secured against your house.

Super Balance Credit Card Transfers

If you have good discipline about repaying your credit card debt and have a descent credit card score then you may be able to find low-interest or even interest-free balance transfer deals for your credit card. This will transfer money right into your bank account, and can be used in order to repay loans and overdrafts. However, this deal comes with a fee and so you need to figure out whether this will be cost effective to your finances.

Reduce Your Loan With Extra Paymentsآ آ آ آ آ

If you are unable to repay a loan in full then you may be able to still make some extra payments in order to pay down the loan sooner, which will lower the overall cost. Keep in mind that you may be charged with a fee for making an overpayment, however it shouldnق€™t be substantial enough to make a big difference.

Follow the Rules

Make sure that you follow your lenders policies in order to avoid any unnecessary fees. By making sure you are up to date on all your lenders policies, you will be able to know exactly what steps you need to take when you want to take a certain action. For instance, you usually have to let your lender know in advance when you want to make an overpayment on your loan; you canق€™t just turn in extra money whenever you please. Once you warn your lender then you typically have a certain amount of days that you can send in your money before your notice is void and you will be charged a fee.

Reclaim Payment Protection Insurance

There are many lenders today that offer insurance for payment protection along with credit cards and loan. If this is the case, and you were unaware that this insurance was added to your policy or if you were unable to use the protection under certain conditions then you could have wasted hundreds of dollars. If this insurance policy was sold under false pretenses or you were not made aware of it then you can receive a refund, which will potentially add a few hundred dollars to your wallet.