No matter what stage you’re at in life, you probably like getting a good deal, right? What if we told you that there are simple strategies you can apply to just about any loan that will save you money and pay it off faster? Financial security doesn’t come just from making more money or spending less; it’s being smart with the money you have. If you’re looking for tips on how to save money on your loans, then you’ve come to the right place!
We know you work hard for your money, and we believe that you deserve to keep more of your earnings in your pocket.
Here are four tips to spend less repaying loans.
Never Miss a Payment with Automatic Payments
First things first. Don’t rack up extra fees in the form of late penalties by making payments late or missing them altogether. And when late payments go long enough and you become delinquent, your credit is negatively affected, not only making that loan cost you more than it should, but potentially affecting your interest rate on future loans.
Want to make sure you never have a late or missed payment? Set up automatic payments on your loans. Automatic payments are a breeze, and they’re one of my favorite features.
Automatic payments are easy, convenient, and secure. With automatic payments, you’re in control. You’ve got the ability to schedule your monthly payments ahead of time and can set them up to come out at a certain time each month, which means you’ll never have to worry about missing a bill and getting hit with pricey late fees again! Best part? You can do it all from the comfort of your own home with a few, quick clicks.
You won’t have to worry about manually making sure to pay your bills on time each month because you’ve already got it set up to automatically come out by the due date. Plus, you won’t need to write checks to mail out risking the bill arriving late due or getting lost.
Pay More than the Minimum Payment
On a loan with fixed monthly payments, like an auto loan for example, you probably pay the exact same amount every month on autopilot. You get your bill, make the payment, and move on with your life. Have you ever considered paying a little more? Not only does making a higher payment help pay down the loan faster, it actually makes the loan cost less!
How? It’s simple. When you first take out a loan, the amount you’ll pay in interest is calculated based on the you making fixed payments over a set amount of time. However, if you pay more, the principal shrinks faster than projected, and less interest accrues. That means that by paying more, earlier, you’ll end up spending less on interest than if you’d followed the payment schedule exactly.
Now, keep in mind that when it comes to credit cards, it’s not just nice to pay more than the minimum payment, it’s actually pretty critical. While making the minimum payment every month will eventually get the card paid in full, in most cases it will take years and years, and you’ll spend an enormous amount on interest rather than the principal. The ideal with credit cards is to pay the entire statement balance off each month. If you do it that way, you’re not paying any interest at all!
Paying only the minimum on your credit card may be tempting, especially when money is tight and you’re struggling to keep up, but you should always strive to pay more than the minimum.
I’m sure at one point or another we’ve all been in a bind. Emergency or unexpected expenses pop up when we least expect it and sometimes, and the only realistic option is to make the minimum payment.
Make Biweekly Payments
Looking for a way you can pay off your loan even faster? Here’s a good one! Rather than making one monthly payment, why not make biweekly loan payments instead? Not only will this help you pay off your loan faster, but it may also save you a few extra bucks in the end. Talk about a win-win.
Bi-weekly payments hit your budget about the same way as monthly payments. You’ll typically set it up to pay half of your monthly payment every two weeks. Over the course of a year though, you actually end up making 26 half-payments, the equivalent of 13 monthly payments. That puts you a full month ahead of schedule by the end of the year.
By making biweekly loan payments, you’re paying more toward the principal, which decreases the overall interest charged every time you make another payment. Chipping away at the principal faster means less interest accrues over the life of the loan, saving you money! Combine this strategy with the previous one, making each payment just a little bit bigger, and you’ll see your loan principal falling much faster than the standard schedule, all without needing to make a big adjustment to your budget! Plus, at GOLD, we’ve got low, competitive loan rates that can help you make biweekly payments that much more possible for you.
“I’m Already Doing All of These!”
If you’re reading this and thinking, “Wow, I’m already taking all of these actions!”, then kudos to you! You’re in excellent shape already, and because of that, there’s one more way you can save money on your loans. And GOLD can help!
At GOLD, we created something extra special for our most loyal Members—our GOLD Medal Checking account. We strived to create something that’d be unique in its own way and would benefit our Members, and thus our GOLD Medal Checking account was born. It has all the same excellent features as our GOLD Standard Checking account, like no monthly fees or minimum balance requirements, but it goes the extra mile for you to reward you. With GOLD Medal Checking, you will earn significantly higher dividend earnings on your account balance, receive free checks (yes, always!), and relationship pricing discounts on loans.
Relationship pricing on loans? Yep, you read that right! So, let’s dive in to talk about it.
Save Even More with GOLD’s Relationship Pricing Discount
As I mentioned above, Members that have a GOLD Medal Checking account are eligible for lower loan rates on new loans when automatic payments are enabled (and if you’re already used to the ins and outs of auto payments, then this will be a piece of cake).
Eligible loans include GOLD Auto, Recreational, Personal, and Home Equity Loans. You can save 0.50% on the applicable percentage rate of new fixed rate Auto, Recreational Vehicle, and Personal Loans, and 0.25% on the applicable annual percentage rate of a new Home Equity Loan.
We tie payments in to align with your payday. So, if you get paid on a biweekly basis, then half of your full loan payment will come out on the same days you get paid each month.
I’ve created a chart to show you exactly how much you could save with and without GOLD’s Relationship Pricing on loans. Check it out:
Looking at the top portion in the chart above, you’ll see an Auto, RV, or Personal Loan in the amount of $25,000—one without relationship pricing and one with relationship pricing. As you can see, without relationship pricing the interest rate is 2.75%, whereas with relationship pricing, it includes the 0.50% discount making the applicable interest rate 2.25%. While the total payment amounts over the lifetime of the loan would be the same, except for the last payment, look at the total interest you could potentially pay. Without relationship pricing, you’d pay $1,766.33 in interest, whereas with relationship pricing, you’d pay $1,420.63, which would save you a total of $345.70 in interest.
Now, switching gears to look at the bottom portion in the chart above, you’ll see a Home Equity Loan in the amount of $50,000—one without relationship pricing and one with relationship pricing. You’ll notice the applicable interest rates differ, of course, depending on whether or not you’d take advantage of our relationship pricing. Again, the payments remain the same, except for the final payment amount. The interest you’d pay here without relationship pricing is $3,848.41. And with relationship pricing, you’d pay $3,496.16 in interest, which would save you a total of $352.25.
What I love so much about the relationship pricing is that it incorporates loan savings strategies and then gives you a discount to save even more! So personally, I’d highly recommend you take advantage of our relationship pricing discount.
When we put our relationship pricing discount into place for our Members, it truly allowed us to put our core values, mission, and vision to work so we can help our Members achieve financial success.
Want more information about how you can upgrade to GOLD Medal Checking to save money on your loans? Give the lending team a call today: 484-223-4216.