Realistic Repayments: How to Manage the Repayment of Your Loan Instalments

About 12 million Americans take out payday loans each year. If you need some extra cash for an emergency, you may be consider joining their ranks. This is a great idea despite the fact that repayment of loan installments may initially sound daunting.

Here, we’re going to give you some tips and tricks on how to make your monthly payments easier. Read on for a more stress-free personal loan experience so that you can keep your credit score in great shape.

Borrow the Right Amount

It’s important that you know how much money you need to borrow. If you borrow too little, you’re going to find yourself back at square one. You won’t have enough cash to pay for the expenses you initially took out the loan for.

This makes the entire process a moot point. You’ll need to take out another loan and pay back money to two lenders. You would accumulate more interest for no reason.

However, you also can’t take out too much money.

If you ask for a loan that’s too high, you’ll wind up with an unnecessary amount of interest. Interest (APR) is based on percentages, so bigger loans mean more interest. This will naturally make the payday loan harder to pay back, so loan repayment will be more challenging.

Be vigilant. Look at how much money you really need and make sure that you’re asking for the right amount. This is the first step toward making monthly payments easier for yourself.

Negotiate With Your Lender

Once you fill out your FastLoanDirect online application, you’ll be paired with a lender within 24 hours. You’ll then have the chance to work directly with this lender, who has pre-approved you for a loan.

It’s at this point that you’ll have the chance to ask questions and negotiate.

Your lender is going to offer you various payment periods that you can choose from. The minimum repayment period is generally 91 days while the maximum is 72 months. The size of your payment will vary depending on your specific, pre-set payment plan.

If you take out a $1000 loan, for example, you may have the choice between a quick 4-month payback period and a 1-year payback period. If you choose the 4-month option, your payment would theoretically be $250/month. The yearlong payback period would in theory let you pay the lender only $84 monthly.

This is theoretical because longer loans tend to come with longer interest payments. If you take out a 4-month loan, you might get a 10% APR rate and need to ultimately pay back $1,100. This would make your monthly payment $275 rather than $250.

However, if you took out that same $1000 and wanted to pay it back over a year’s time, you would likely get a higher interest rate. For example, it may be 25% rather than 10%, meaning that your cumulative sum to pay back is $1,250. You would pay $105/month, which lessens the burden on you each payment period but ultimately loses money for you.

Make sure to carefully discuss this with your lender. Figure out how much you can realistically pay back each month and choose the shortest payment period that looks feasible. Missing payments isn’t an option, but you don’t want to unnecessarily lose money, either.

Don’t Forget About Interest and Fees

Many lenders charge more than just interest when giving out personal loans. There are other fees to think about, too. If you don’t keep tabs on these fees, you’ll have a much harder time budgeting your monthly expenses.

Some possible fees include:

• Administration/origination fees for setting up the loan
• Prepayment fees when you begin paying off the loan
• Late payment fees that you must avoid at all costs
• Non-sufficient funds fees
• Annual maintenance fees (for those with payback periods longer than a year)
• Early settlement fees (if you finish paying the loan back early)

Note that not all lenders take these fees. Some only take an origination fee. Others take no fees whatsoever!

It will all be up to you to determine with your lender.

Make sure that you write down any fees that you need to remember. Put them in a planner, on sticky notes, and/or in your phone’s notes applications. This will ensure that you don’t forget about any additional fees you need to pay.

Set Up Automated Payments

Automated payment plans will be your best friend when paying back a personal loan. It can be hard to remember when you need to manually pay things back, especially when you’re busy and have a lot to juggle. Many people miss payments even when they have the funds to pay them off.

This will take the money directly from your bank account and give it to the lender. They’ll get it on the due date. You’ll get a confirmation saying that the payment went through.

You can also set up alerts reminding you that the payment will be taken out soon. If you get this alert 2 days in advance, you’ll know to go and move money in your accounts around accordingly. This will prevent you from overdrafting with the bank or getting his with insufficient funds fees from the lender.

Budget According to These Payments

Repaying your loans requires a lot of budgeting for your monthly expenses. You’re going to want to add your loan to a list of necessary recurring expenses. It will be similar to your rent, utility bills, and credit card bills in this way.

The good thing about your loan is that you’ll know exactly how much you’re paying each month in advance. Unlike credit card bills, which vary depending on how much you spend that month, payday loans offer fixed-fee payments.

It will always be the same so you can plan to pay a predetermined amount. Just subtract that from your budget and you’ll be ready to go.

Loans are meant to make your life easier so you can get back on your feet. This should make pulling from other areas of your budget easier.

Take a small amount from your budget for eating out, entertainment, and other expenses that aren’t 100% necessary. You’ll still have enough to treat yourself, but it will be slightly less in these areas. You’ll know how much you’re losing in advance so you aren’t blindsided later on.

You also might pay off your credit cards in smaller amounts. Making your minimum payment is important, but you might not pay extra until you finish paying off your loan.

Better yet, you can use a payday loan for debt consolidation. This means using the loan to pay off multiple credit cards. You’ll be able to budget much more easily then since you’ll have one pre-set monthly loan payment.

Never Miss an Installment

Late loan payments can significantly decrease your credit score. Missing one is even worse. If a month goes by and you still haven’t made a monthly payment, it could decrease your credit score by 100+ points.

This is bad because it can impact your ability to get approved for some future loans. It can also cost you apartments when landlords see a low credit score. You’ll have a harder time buying property and getting a mortgage as well.

That’s why the first rule of taking out loans is that you can never miss a payment.

Automated payments are the best way to do this, but you also will need to check to make sure that the payment was made. Go into your bank account on a predetermined date and make sure that the monthly payment went through. Be vigilant about this to ensure that you don’t get into a financial pickle where your credit record suffers.

There’s good news here, too: payday loans can actually help your credit score a lot.

If you miss payments, you’ll hurt your credit record, but the opposite is also true. If you pay your debts back on time and in the appropriate amount, your score will steadily rise. This is because you’re showing lenders that you are capable of paying what you owe without any issues.

Beyond Repayment of Loan Strategies

While the repayment of loan installments may sound like a daunting task, there are several ways you can make it easier for yourself. It’s far less stressful to apply for loans when you understand these tips. Now that you know the ins and outs of monthly payments, it’s time to request your required loans confidently.

FastLoanDirect offers loans between $100 and $35,000 for next-day direct deposit. All you need to do is give us some simple information online so we can pair you with a lender. Fill out our online form to get started and pay your emergency expenses.