Ways to Repay Your Debt Early

repay your debt early
Repay Your Debt Early | Debt Repayment

When you pay your debt off earlier than the set term, you will be able to save considerably on interest.

There are different methods which you can use for achieving this goal. They are presented in detail below. Before you adopt either one of these methods, you should check specifically what terms and conditions your lender has set for early repayment. In some cases the borrower has to follow a specific approach while in others there are additional costs involved typically in the form of fees charged by the lender.

Analysis & Preparations

Typically, paying off debt early is a highly beneficial solution. However, this may not necessarily be the case. You have to consider your current financial situation and future financial plans to determine whether this will be the right solution for you.

If you think that you may not have enough money to cover emergency expenses, early repayment may not be right for you. Similarly, if you have to make improvements to your home or pay for your children's education you may prefer to cover these costs first. You have to take into account the terms and conditions of your current loan for making a final decision.

If the interest rate is low while the repayment terms are easy and flexible, you may not go for early repayment, especially in case the borrowing conditions are expected to deteriorate.

It is best if you use a loan calculator to evaluate the precise pros and cons of early repayment for you.

Flexible Repayment

This method involves making extra payments whenever you have cash left. It is the easiest and most flexible of all. At the same time, it is the hardest to use. You will require great financial discipline in order to make extra payments without following a fixed schedule.

The good news is that you can systematize this approach as much as possible to achieve your goal. You can plan to use any bonuses from work and money gifts that you receive towards the loan repayment.

Alternatively, you can set aside a portion of your income every month and use it to make an additional payment.

One Additional Payment

This is another very simple approach that you can follow. It involves making an additional payment every year. You will be making 13 annual payments instead of 12.

Typically, the people who adopt this method use their end-year bonus from work for making the additional payment. If you think that you may not be that disciplined during the holiday season, you can divide this additional instalment into 12 payments.

That way, you will pay an additional fixed amount of money every month.

Biweekly Payments

This method involves paying a loan instalment every two weeks rather than every month which is the norm for most types of loans. With this approach, you will make one complete extra payment per year. Basically, the monetary gains will be the same as with the extra annual instalment.

However, the major advantage of this approach is that you will not see a considerable increase in your monthly expenses. One thing to watch out for is the cost of making two payments per month instead of one. Check any transaction fees which you pay carefully.

Special Debt Repayment Programs

There are many debt consolidation providers who offer special programs designed to help borrowers pay off their loans early. They have different payment structures and terms and conditions so they require careful assessment. The main thing to watch out for is the presence of any charges. Some programs come with additional fees. It is up to you to decide whether it will be worth paying these fees given your current income and your savings plans.

You are in no way obliged to enter these programs and to pay the fees. You can go completely on your own. You can readily arrange automatic payments from your bank account. This should help you save on transaction fees.

There are also programs for early debt repayment offered by independent companies. These always come with a fee since the companies' goal is to profit. When you join, you will get an individual plan for early repayment and the program will take care of the payments. These services are useful only for those borrowers who find it difficult to be financially disciplined. If you can plan the early repayment and stick strictly to the plan, you do not have to join such a program.

You will enjoy considerable savings with early debt repayment based on a precise plan.

Popular & reliable direct lenders offering Debt consolidation

  1. Capitec Consolidation loan


    • Loans up to R250,000
    • Term up to 84 months
    • Interest from 13.75%
  2. JustMoney Consolidation loan


    • Repair your credit score
    • Get out of debt
    • Credit life insurance
  3. African Bank Consolidation loan

    African Bank

    • Loans up to R350,000
    • Term up to 72 months
    • Interest from 15%
  4. National Debt Advisors Consolidation loan

    National Debt A...

    • FREE debt assessment
    • Debt relief options
    • Become financially free