Reduce the Term to Save on Interest

Created: 2016-12-07 07:00:00

Once you choose a lender and decide how much loan amount you would apply for, you need to do the math and see if the repayment will be affordable. You can make some changes to your monthly budgets, to your lifestyle and discretionary expenses so you can comfortably keep repaying. But you will need to look for some effective ways to save on repayment of smart loans in UK.

One effective way to save some money is to reduce the term of the repayment. This doesn’t really apply for smart loans or payday loans that must be repaid at once. For all short term loans that can have terms ranging from three months to two years, you may consider reducing the period. You will save on interest.

Anyone can do this math. Imagine how much interest you would be paying over a period of twenty four months and how much you would pay in say ten months. You can save substantially. There is a challenge though. You will have to repay much more every month but the eventual amount will be much lesser than what you would have repaid by the end of the twenty-fourth month. You can decide if you should be reviewing your budget for a period of six months or so to accommodate the repayment or you will make minor changes and bear with it for two years.

When you reduce the term, you may witness some lenders increasing the rate of interest. This happens with unsecured short term loans, especially when borrowers don’t have a desired credit history. Do not sign up for such loans. Reducing the term is for your benefit and not that of the lender. You would be squeezing your finances harder so you need to be rewarded. The lender shouldn’t try to make up for its losses in interest by hiking the rate.

Warning: Late repayments can cause you serious money problems. For help, go to moneyadviceservice.org.uk