Make A Budget
Ideally you would have done this before taking out a personal loan, but let’s move on from that. If you do not have a budget and now have a loan payment, you need to create one right away to make sure that you will have the money to pay it off.
First, write down all of your fixed bills like car payments and auto insurance. Then add in allotments for things like entertainment, food and fuel. Finally insert your new loan payment. If things look tight, you are going to need to make some cuts.
The simplest cuts will be for things like food. There are literally dozens of ways to slash your food budget if you are motivated. Hopefully that will do the trick, but if not, look at your entertainment budget, shop for cheaper car insurance, etc. There are all sorts of ways to trim a budget.
If cuts are not possible, you can also consider adding a little additional income. Even in a bad economy there are chances to earn. A simple once a week shift at a local Walmart can earn you nearly 500 dollars extra a month.
Add A Few Bucks To The Payment
A few extra dollars here and there can make a big difference. On a 20,000 dollar loan, paying just 20 dollars extra a month can save you nearly 300 dollars in interest. It would also allow you to pay that loan off 3 months sooner.
The great thing about just adding a few bucks to a payment is that you will likely never notice the extra money from month to month. I mean, will you really miss 20 dollars a month? Probably not. At the end of your loan though, when you have saved hundreds in interest and paid the loan off early, you will notice.
Set Up Auto Pay
Bad about making payments on time? It can cost you, which is why you need to take advantage of auto pay. Sure, it seems like you are giving a company control of your checking, but it beats making a late payment or getting a 30 day late strike on your credit report.
Even if you are good about your bills, you should look into auto pay. Many lenders will even give you an interest deduction when you sign up Even just a quarter percent interest can make a big difference over the life of a loan.
If you didn’t get the greatest rate on your personal loan, consider refinancing it after 6 months or so. After making payments on time, your credit rating is likely to increase and that could allow you to secure a much lower interest rate.
Personal loans can improve your credit in a number of ways. First, the payment history can only do good for you, if you make the payments at least. Also, adding an installment loan can increase your credit diversity. Lender like to see that you can handle a mix of credit and if you were lacking int he installment loan area, your score could get a boost.