Feeling weighed down by debt repayments? We’ve got eight practical tips to help you pay off your loan faster and get that monkey off your back. 

No matter the size of your loan, these tips are designed to help you fast–track your repayment journey and achieve your financial goals.

How to repay loan quickly

Use your tax refund as an extra loan repayment

As tempting as it may be to splurge on a holiday or indulge in some retail therapy, redirecting your tax refund towards your loan can accelerate your repayment journey.

This strategy can apply to any lump sum payments you receive, like a bonus from work or another windfall. Before you can spend it, transfer the money straight to your loan.

Imagine the peace of mind and financial freedom you’ll experience when you finally do take that dream holiday, free from the weight of loan repayments!

Make fortnightly payments

Instead of making one monthly repayment, consider making fortnightly payments. This can reduce the amount of interest you pay over the life of your loan. Here’s an example of how it can work:

If you have a $10,000 loan with a 5-year term and a 6% interest rate. Your monthly payment would be $193 and you would end up paying a total of $1,600 in interest over the life of the loan.

However, if you switch to making fortnightly payments of $97 (roughly your monthly repayment divided by two), you’ll end up paying off your loan five months earlier than the 5-year term. You’ll also save $167 in interest.

Pay a little more on each repayment

Even the smallest of increases to your regular loan repayment can add up to a significant reduction in interest payments over time. It’s a great feeling to see your loan balance decreasing just that bit quicker!

Not all lenders allow this, but with a Finance One personal loan, you can make extra repayments or increase your repayments. We’re here to support your best financial journey with a flexible approach.

Think of it this way: by making a little bit of extra effort now, you can enjoy a debt-free future sooner than you think.

Increase payment amounts and frequency

If you’re looking to accelerate your repayment process and have room in your budget, you can implement both the strategies mentioned earlier: increasing the repayment amount and frequency. By doing so, you’ll see a much quicker reduction in your debt.

Check out a repayment calculator to get an idea of just how much interest and time you could save by making small changes.

Start a side hustle

Starting a side hustle can be a fun and lucrative way to chip away at your debt. 

Commit to putting every dollar of extra income from your side hustle towards your loan repayments. Here are a few ideas to consider that don’t require much (or any) investment to get started. For most, you’ll just need access to the internet and a computer.

• Online language tutoring.
• Pet sitting.
• Freelance writing.
• Dropshipping. 
• Signing up to a site like AirTasker to offer services for a range of needs, from assembling furniture or assisting with business administrative tasks.

Don’t underestimate the power of a Facebook Marketplace blitz! Take advantage of this online platform to sell any items you no longer need and commit to putting all the profits towards your debt. If you’re feeling extra ambitious, consider holding a garage sale, joining eBay, or even selling your items at a trash and treasure market.

By offloading unused items, you’ll not only generate additional funds to pay off your loan faster, but you’ll also declutter your space too! It’s a win-win situation.

Try the debt avalanche or snowball method

Juggling multiple loan repayments? You could try the debt avalanche or debt snowball method, both are popular debt repayment strategies. 

The debt avalanche method involves paying off the debt with the highest interest rate first — for this method to be effective, you’ll generally need to contribute extra funds to smash down the interest repayments. For example, if you have a loan term of five years with an interest rate of 12%, and another loan with a term of three years and an interest rate of 6%, making only the minimum repayments will see you pay off the loan with the smallest interest rate first, purely because it has the shorter loan term. For the avalanche method to work, you need to contribute additional funds to the 12% loan, while maintaining the minimum repayments on the loan with the lower interest rate. Once the higher-interest rate loan is repaid, the additional repayments can be moved to the other loan.

By paying off the highest-interest debt first, you’ll reduce the amount of interest you’re paying each month and accelerate your debt repayment process.

The debt snowball method involves paying off the smallest loan amount or debt first. The idea here is by paying off your smallest debts first, you’ll gain momentum and motivation as you see progress being made towards paying off your debts. Again, you’ll likely need to contribute additional funds to make this method effective, otherwise you’ll simply be paying your loans off according to their length.

Choose the method that works best for you and stick to it to pay off your loan faster.

Consider consolidating your debt

Some lenders in Australia give you a way to transfer your personal loan and credit card debt to one consolidated loan. If you’re smart about it, this can be a powerful tool to help you get out of debt faster. 

Here’s how it works: you transfer the balance of all your debts over to a new loan with an interest rate and loan term that suits your needs. Ideally, the interest rate will be lower to offer you a temporary reprieve from interest charges, which will help you focus on paying down your debt.

Finance One now offer debt consolidation loans for bad credit score. Regardless of any financial stumbles you might have had in the past, we can work with you to consolidate your debts, create an individualised repayment plan and provide guidance and resources to help you stay on track. 

Use a goal-setting money app

While an app won’t directly increase the amount of money you allocate towards your loan, it can help you stay motivated and focused on your repayment goals. 

With a goal-setting money app, you can set specific debt repayment goals, such as paying off your personal loan within a certain timeframe.

This is particularly useful if you’re implementing a strategy like allocating side hustle earnings towards your loan or making extra payments when possible. Without a tangible goal to work towards, it can be easy to lose sight of your commitment to repay the loan. However, with a goal tracker, you can keep yourself accountable and on track with your extra repayments.

Check out the award-winning app Debt Payoff Planner that helps you create a plan and stick to it.

Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.

Finance One means:
Fin One Pty Ltd – ABN: 80 139 719 903
Australian Credit Licence: 387528

Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent advice regarding your legal, financial, taxation or other needs, to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.