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The secrets to successfully making personal loan payments

[Mar 5, 2011.]

 

When you apply for a personal loan you may be given quotes for fixed-rate and adjustable-rate products. Having fixed loan payments can give you stability because you'll know exactly what to expect each month when the bill arrives. With an adjustable-rate your monthly payment can fluctuate and you run the risk of payments rising to a point where it would be a struggle to make them on time each month.


Minimum loan payments


A strategy for paying off debt before even applying for a loan is important. While the monthly statement will have a minimum payment, it is always best to pay more if you can. Don't wait for a financial windfall. Use any extra funds you can spare in your budget to knock down loan balances. You may have to examine your overall spending patterns to find areas where you can cut back so that you'll have more cash to put toward loan payments.


Personal loan terms and conditions


Always read through the terms and conditions of the loan application before signing it. Lenders are in the business of making loans to earn interest. Paying off a personal loan early cuts down on the amount of interest the lender would receive from you, so there could be a prepayment penalty involved with an early payoff. The terms and conditions should also give information on the when monthly payments are due. Not making a payment on time could result in a late fee.


Think long term with a personal loan


Never make major financial decisions like borrowing a large sum of money without thinking through the ramifications. It is not always a good idea to borrow money. But if you do get a loan make sure that you are fully aware of all of your rights and responsibilities for paying it back. If you already have a loan and are struggling to keep up with the monthly payments, consider getting help from a debt counselor. Debt counseling could help you review your finances so that you can put together a debt reduction strategy you can stick with.


 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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