Cracking the Personal Loan Code – How to not repay too much?

Cracking the Personal Loan Code - How to not repay too muchA poor credit score may result in being denied a loan by a bank or other institutions. If you manage to secure a personal loan, you will end up paying hundreds or thousands more in interest over time. It will hurt you more financially in the end, and you may end up buried in debt. However, there are many other things you can do to avoid replaying too much.

Repaying Personal Loan Faster

When you are almost overwhelmed by debt, you may wonder how it is possible to replay the loan faster. Luckily, there are a couple of ways you can make that possible without crippling yourself financially. Shortening the repayment period reduces the amount of interest that you will pay for your loan.

Pay off Loan use Savings

If you have money from savings, you can use them to repay your loans. Focus on the most expensive loans first if you have several of them. It may disorganize your saving strategy, but it will give you financial freedom in the long run to remedy your situation.

You may want to confirm the early repayment charges for your loan first before you opt for the faster repayment. In most cases, the terms will be friendlier than paying over an extended period. A long term loan may cost you less in the long run if you pay it faster. If you have a large amount in your savings, servicing your loan with it can reduce the burden of the loan on your wallet. Together with your monthly repayments, you will be able to clear the loan faster.

Switch to a Low-interest Loan

You may not know that you can pay your current loan with another loan. It is possible to settle your loan and prevent the accumulation of interest using a better loan. You need to look out for a loan that offers a low-interest rate, shorter deal, or both. You will be able to pay your loan faster and avoid repaying too much.

The catch here is that you may need to pay more monthly to service the new loan. However, you will pay less in the long run as you save more on interest. You will be able to also replay the loan earlier, which will result in a positive credit score. And as you know by now, a positive credit score affords you lower interest rates.

Before settling for this option, ensure you get these two things right. One, you can afford the monthly repayment amount of your new loan. Secondly, fins out the set-up costs and ensure they are minimal.

Improve your Credit Score

If it’s not an emergency, you can focus on improving your credit score. Your credit score is not as complicated as you may think. Having an idea about how it is calculated can help effectively work on improving the credit score. However, its not important now. You can learn about this some other time. So what can you do to improve your credit score?

Three aspects account for 75% of your credit score. Putting effort into these three things will boost your credit score in 3 to 6 months.

  1. On-time repayment of your loans.
  2. Low credit utilization where you have to reduce your balance on credit cards to below 30% of the credit limit.
  3. No new credit applications.

As you can see, if it not that complicated when it comes to improving your credit score. It, however, takes some readjustment of your financial habits. You may need to analyze your spending behavior so that you fit into your income. Use the aforementioned methods to ensure you make on-time payments. Although 30% of credit utilization is favorable, remember that the lower the figure, the better it is for your credit score. And by all means, do not apply for new credit.

Bad Credit Loans

Loans for bad credit come are the Holy Grail when it comes to emergencies. They come in handy when every other option is impossible, and you don’t have time to improve your score. Bad credit loans are ideally personal loans that don’t require a good credit score. Institutions offering these loans for bad credit will now also charge you high interest just because of your poor credit score. The loans are relief options for people whose borrowing options are limited by a poor credit score.

A bad credit loan is treated as a personal loan, and you will pay it back in monthly installments. You have several options which include:

Online Loans

Currently, a large number of institutions offer a verity of online loans courtesy of technology. These loans have the advantage of being fast. It is simple and easy to fill out online personal loan applications. Your application is processed in a matter of hours, and you may get your cash loan within a day. Some may use your credit score but only in the decision-making process. Even better, some have their credit score models, which are more favorable.

Credit Unions

Another great option is to turn to credit unions. The advantage with credit unions is the interest ceiling of 18% for loans. A similar loan for a bank will be charged as high as 36%, which makes this loan option the ultimate choice. You will want to go to credit unions affiliates to your employer or those that are community-based. They are more likely to overlook your credit score and based on your character and promise to repay the loan.

Peer-to-peer Lending

P2P or peer-to-peer lending is a vast market of lenders who can offer you loans on flexible terms. Now that they are individuals or groups and no institutions, they don’t rely heavily on your credit score. You can currently find many of these P2P lenders on online platforms where they list their terms. People have been getting bad credit loans directly from individuals since 2005 on P2P lending platforms.

Other Bad Credit Loan Sources


You can avoid replaying too much by paying your loan faster. You can also achieve lower interest rates by improving your credit score. In case it is an emergency situation, then bad credit loans come in handy. Personal Loans are an easy way to get back on your feet financially.

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