Reducing Your Loan Interest Payments

If you have a long-term loan with high interest, then you might find
yourself paying almost as much in interest payments as you are towards the
money you borrowed. If this is the case, then you should look at ways to
reduce those loan interest payments.
Reducing your loan interest payments will help you to pay off your loan more
quickly, and thereby save yourself money. Here are some tips on how to
reduce your loan interest payments.

Change your loan

One way to reduce your interest payments is to swap to a different loan
company. Refinancing your loan with another company might seem like a lot of
work, but if you can get a lower interest rate you could save a lot of
money. Shop around and compare loan prices to see if you can get a better
deal than you are now. Even if you reduce your APR by 1 or 2%, you could
save yourself a significant amount of money.

Bi weekly payment

Another method for reducing loan costs is to start paying bi-weekly. Instead
of paying your monthly amount, pay half of your monthly amount every two
weeks. There are 4.3 weeks in every month, so you will find that you pay
your 12 months'
payment in just 11 months. This will leave you one whole month of extra
payments, thereby reducing your loan amount and interest. This method can
save you a lot of money. If your loan company will not accept prepayment
every two weeks, then just pay 13/12 of your monthly payment each month,
thereby accomplishing the same as bi weekly payments. Although some loan
companies charge for overpayment, most lenders will be able to accommodate
this payment method.

Early settlement

Another way to reduce your interest payments is to pay off larger parts of
your loan at once. This will reduce the total amount you owe, and therefore
reduce your interest payments.
Some lenders charge for early settlement, although many allow you to pay
back up to a certain amount before charges take place. Even the smallest
extra payment can help to reduce your loan interest payments and save you
money. The more you pay, the quicker your loan will be paid off and the more
money you will save.

Using credit cards

To reduce your interest payments on a loan you can take advantage of credit
card 0% offers. If you can find a card that has 0% for 6 months, then use
this card to pay off part of your loan. Although you will pay much higher
interest once this time is up, if you can pay back the credit card in this
time you will save money on interest payments.

Secured loans

Although they are more risky, secured loans generally have lower interest
payments. If you refinance to a secured loan, you could save a lot in
interest payments. However, you need to make sure that you can afford the
payments, as otherwise you risk losing your home. If you follow at least one
of these steps, you will reduce your interest payments and save yourself
money.

About The Author: Peter Kenny is a writer for The Thrifty Scot, please visit
us at http://www.loanwize.co.uk and http://www.thriftyscot.co.uk/Loans/