How to pay back a loan: Tips to make it faster and easier

Here are a few tips to help you plan for repaying a loan, how to make it more manageable and how to pay it down faster.

• Have a plan and a budget

It’s vital to know where and when to make the payments and how it fits within your financial capability. Having a plan will help you be prepared both mentally and financially for making the payments each month and on time, and it will help you prioritise your payments.

Your budget will help determine how much money you can allocate towards your repayments or whether you need to make adjustments.

• Set up automatic payments

Setting up a debit order simplifies the payment process since you don’t have to remember to make the payment.

This ensures that you won’t miss a payment (negatively impacting your credit score) and helps you avoid late fees and penalties. It also makes it easier to budget because you’ll know exactly how much money is deducted every month, helping you to plan around it.

Quickly and easily create scheduled and recurring payments on our Banking App.

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• Pay more than the minimum

If you repay more than the minimum monthly repayment, you’ll be able to pay off the loan faster, and it will reduce the amount you’ll pay on interest over the life of the loan.

For example, on a personal loan of R100 000 over 36 months at 20% interest, your monthly repayment* would be R3 830, and the total loan repayment cost would be R137 880, which includes interest over the life of the loan.

If you added R553 to your monthly repayment, you’d pay R4 383 per month and repay the loan in only 30 months. The total cost of the loan would be R131 490, saving you R6 390 in total over the life of the loan.

Use our personal loan calculator to estimate how much you could save by paying off a loan earlier.

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_{*Estimate is an indication only.}

• Make extra lump sums

You can also make ad hoc lump sum payments when you get a cash windfall, such as a bonus, tax refund or increase. This could also help you pay off the loan faster.

Important: Check with your bank whether there are any penalty charges for paying back your loan early.

• Consider debt consolation

You can streamline your payments by consolidating your loan with other loans so that you have a single, more manageable loan and repayment amount. Combining your debt is less time-consuming and means less fees and potentially lower interest rates.

With the right mindset and strategies in place, paying back a loan easily (even early) is achievable. By being consistent and staying focused on your goals, you’ll be able to better manage your loan repayments and make progress towards reducing your debt.

_{Disclaimer: This article is solely intended for information. It does not constitute financial, tax or investment advice or recommendation. Please speak to a financial advisor or registered financial professional before making any financial decision(s).}

_{Standard Bank, its subsidiaries or holding company, or any subsidiary of the holding company and all of its subsidiaries make no warranties or representations (implied or otherwise) as to the accuracy, completeness or fitness for purpose of the information provided in this article or that it is free from errors or omissions.}