By Rupeezo | 28th, Mar, 2023
A quality education is a wish fulfilment for many students, but the cost to attain such education is unattainable for most. So, one has to take the aid of education to get the education of their chosen university, especially when the college or university is overseas.
Whilst many financing companies or lenders provide flexible education loan repayment terms for an education loan, you should always try to pay it off faster.
A student loan can be a burden on students, and paying them off can help in easing the financial burden and manage your finances.
With that being said, there are some tips are using which, you can repay your education loan faster.
Most student loans offer a grace period. In this, you don’t have to start repaying the loan, before you complete your education. The grace period in your student loan repayment plan typically lasts six months, and it may vary depending on the lending source through which you borrowed the education loan. Instead of allowing this time to pass in vain, you may start repaying your loan. Especially, if you have a side income or any means to repay the loan. Also, it will also help shorten the repayment period. Even if you can payments in small amounts or start saving, it will help a lot in the long run.
While applying for an education loan, if you choose a minimum payment plan for paying back student loans, then it may lead to longer repayment periods. This will certainly not help in repaying the loans faster and it will increase the cost of borrowing too. So, it is advisable that you choose the maximum payment or a payment that is a little more than the minimum payment for the EMIs. This will also help reduce the principal amount on the loan and the interest charges. It is a great way to pay off your education loan faster and get on with your life.
If the high-interest charges on your education loan feel like a load, then refinancing may be the option for you. Refinancing your education loan is a process that involves taking out a new loan with a lower interest rate and using the proceeds to pay off your ongoing student loan. But it’s important that you associate with a lender that provides such a refinancing option for the education loan repayment, as some may not.
Refinancing your education loan is one of the best ways to lower your EMIs, cut down the overall borrowing cost, and shorten the repayment period. Refinancing may not be an ideal solution for every student, but it's worth knowing about this option more if you are having a hard time repaying your student loan.
Another way to facilitate faster repayments of your student loan repayment can be automatic payments. Besides ensuring faster payments, automated payment options ensure that you don’t skip your payments. Given that your bank or non-bank option offers this facility, exercising this option can help lower the overall cost. Depending on the lender or financial institution, you may also get a discount or other offers for using this option. Activating the automated payment options can also help you avoid missing out on payments, and late fees, and help you pay the loan faster.
One way to ease the burden of paying back student loans is to choose a shorter tenure. In a short repayment term, you may have to pay comparatively higher instalments, but there are some benefits to it as well; you will save some interest on your education loan and get a concession on other charges as well. This does not in any way means that you should opt for a repayment scheme you cannot stick to. The affordability of the EMIs should be your primary concern. It is crucial to choose the shortest tenure that you can practically afford. You can take the help of an EMI calculator to find out a large amount that you can manage to pay.
To make your employer student loan repayment a smooth endeavour, income-driven repayment plans can be a great option to consider. Income-driven repayment plans adjust your monthly payments based on your income, so you can make payments that are more affordable for you. These plans can help you easily manage your student loan debt considering your current financial situation.
While income-driven repayment plans can extend the repayment period and increase the principal loan amount, they can still offer relief for borrowers who are struggling to make payments on their loans.
To ensure that you can afford to pay instalments for the shorter tenure on your education loan repayment, try saving more. One simple to do that is to reduce your expenses. It will help you free up more money to put towards your education loan payments. You can cut down on your expenses in many ways such as cooking at home instead of eating out, cancelling unnecessary subscriptions or memberships, taking public transportation instead of driving, etc. You can come up with your tricks to reduce your expenses, and you will realise how easy is it to spend less and save more money. The saved-up money can be used for repaying your student loan faster.
If you come into a windfall of cash, such as a tax refund or bonus from work, consider using that money to make a lump sum payment on your employer student loan repayment. Making a lump sum payment can help you reduce the principal balance of your loan and pay less interest over time. These extra payments can help you repay the loan faster. Besides the lump-sum payments, you can also make additional payments to quickly reduce the loan amount. Reduction in the overall cost of borrowing by making the extra payments will help reduce the interest on your education loan as well.
To know more about the ways to repay your education loan faster, apply for Instant Loan for Students with Rupeezo.
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