Are you feeling weighed down by a massive loan balance? Whether it’s a student loan, personal loan, business loan, or maybe even a payday or doorstep loan, that looming debt can seem never-ending. Loan types and terms vary, too – some have high interest rates while others stretch repayment over many years.
But don’t lose hope! This guide is full of smart tips to help you knock out that huge loan way faster and cheaper than just paying minimums. We’ll explore straightforward money-saving strategies anyone can use, requiring no complicated tricks.
Maybe you took out a giant loan for college tuition and expenses. Or you financed a new business venture with startup capital loans. Perhaps you consolidated multiple debts into a large one by taking out urgent doorstep loans in Ireland when your payments were near. Whatever the situation, that enormous payment obligation likely feels overwhelming. The good news? You have more power to speed up repayment than you think!
Making Extra Payments
Putting any extra cash straight towards the loan is super helpful. Even small amounts make a big difference over time. Every added payment chips away at the principal balance quicker. Reducing the principal means paying less total interest charges, too.
For example, let’s say the loan balance is 25,000 euros at 5% interest. Making one extra payment of 100 euros would save around 625 euros in interest over the life of the loan. That’s free money back in your pocket just from a little extra effort!
Reduce Principal Balance and Interest Charges
The smaller you can make that principal balance, the less interest will accumulate each month. Even paying an extra 25 or 50 euros whenever possible adds up rapidly and saves money. Just make sure to specify the extra amount goes towards the principal, not next month’s payment.
To give you an idea, paying an extra 100 euros per month on a 25,000 euro loan at 5% interest would save over 2,700 euros and have it paid off years sooner. Little amounts pack a punch against that principal balance!
Using Windfalls and Bonuses
Unexpected extra money is the perfect chance to knock down the loan faster. Things like:
- Tax refunds
- Bonuses from work
- Inheritance money
- Selling valuable items
Instead of spending those windfalls, put them straight towards that principal! One lump sum payment makes a huge dent and reduces what’s owed every single month after that.
The key is being disciplined when those windfalls come in. Resist blowing money on wants and put it to work to eliminate that debt burden efficiently. Make a plan ahead of time to avoid temptation!
Paying more than the minimum whenever possible yields big rewards. Every extra dollar cuts down the principal and future interest owed. It may not seem fast, but staying persistent gets that loan paid off sooner without straining too hard. The relief of being debt-free is so worth it!
Implementing Bi-Weekly Payments
Instead of one big payment every month, you pay half that amount every two weeks. This simple trick results in one extra full payment made each year! And that extra payment goes straight towards chipping away at the principal balance faster.
Why does this work so well?
- There are 52 weeks in a year
- If you make a payment every two weeks, that’s 26 half payments
- 26 half payments equals 13 full monthly payments per year
- So you’re making one entire extra payment yearly without any added effort!
That extra payment yields big savings over the full loan term. It reduces the total interest charges and number of payments needed. The loan gets paid off much sooner just from this easy bi-weekly setup.
Methods To Pay Off Loans
Applying the Debt Snowball
You then focus on aggressively paying off the smallest debt first while making minimum payments on the rest.
The key benefits are:
- Achieving quick wins by eliminating debts fast
- Gaining psychological motivation as you see accounts closed
- Freeing up cash flow as payments are consolidated
Applying the Debt Avalanche Method
Prioritise paying the maximum amount possible on the highest-interest debt first while paying minimums on the rest.
The main advantage is:
- Saving the most money on interest charges long-term
- Debts costing the most in interest are eliminated rapidly
The key difference between the two methods:
| Debt Snowball | Debt Avalanche |
| List debts from smallest to largest balance | List debts highest to lowest interest rate |
| Pay minimums on larger debts first | Pay minimums on lower interest debts first |
| Eliminate small debts quickly for motivation | Eliminate high-interest debts fastest to save money |
| Better for freeing up cash flow rapidly | Better for saving on total interest paid long-term |
| May pay more total interest | May take longer for perceived progress |
Try to get Lower Interest Rates
If you’ve got loans with high interest rates, it’s smart to look at ways to reduce those rates. Even a small drop in interest can equal huge savings over the full loan term. The goal is to pay less total interest charges.
One good option is refinancing the loan to a lower rate. This involves getting a new loan to pay off the existing one, ideally with better terms. Shopping around lets you compare offers to get the very lowest rate possible.
Consolidating multiple loans into one bigger loan can also lead to lower overall interest. Instead of paying higher rates across many smaller debts, it rolls everything into one new loan with an ideally lower blended rate. Just make sure the new rate is actually better before consolidating.
There are lots of legit loans in Ireland to explore for refinancing or consolidating. From banks to credit unions to online lenders, shop rates thoroughly to find the best deal that fits your situation and can lower those interest costs substantially.
Increasing Income Streams
Finding ways to earn extra money is a smart move for paying down loans quickly. Even just a little side hustle income makes a big difference when put towards those payments consistently.
You could pick up a part-time job for some extra hours each week, like:
- Driving for a rideshare service (€300-€800 per month)
- Waiting tables or bartending (€200-€600 per month)
- Retail cashier or stocking shelves (€200-€500 per month)
- Pet sitting or dog walking (€100-€400 per month)
Or look into freelance gigs using skills you already have:
- Freelance writing or editing (€200-€1000+ per month)
- Web design or coding (€400-€2000 per month)
- Tutoring or teaching online (€200-€800 per month)
- Task jobs through apps like TaskRabbit (€100-€500 per month)
The key is taking that extra money you earn and putting every single cent of it towards making additional loan payments above the minimum amount due.
Conclusion
That immense loan balance burdening you is now getting demolished! By applying the powerful debt-smashing strategies from this guide, you’ve got an unstoppable game plan for obliterating what you owe.
We covered all the angles – setting up bi-weekly payments, lump-summing windfalls to the principal, refinancing for lower rates, earning side income for extra payments, and utilising the debt snowball or avalanche methods. These straightforward, systematic tactics turbocharge your repayment results over the loan’s full term.
No more burdensome monthly payments draining your budget and future. No more sleepless nights stressing over ballooning interest charges you’ll never escape. With this proven approach, you’ve taken control to demolish that loan balance rapidly and cost-effectively.
Caleb works as a senior content writer at Financealoan for the past 3 years. He is a writing enthusiast and invests a good time in exploring and writing about financial trends. His keenness in exploring a topic to create a research-based piece is simply unmatched. He believes in including a texture of authenticity with real-time examples and facts.
Caleb’s blogs and articles reveal deep-seated knowledge and expertise. His educational qualification forms the base of his excellent command over the industry and Jargon. He is a postgraduate in Finance and is currently involved in exploring the world of the stock market.
