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How to Pay Off Your Loans Fast to expand your business

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Loans

Photo by Olga DeLawrence on Unsplash

If you are looking to expand your business and have found yourself in debt, you are not alone. The total debt of companies in the USA is close to $13 trillion. Loans are an important part of growth, allowing entrepreneurs to invest in the labor and infrastructure which will take their business to the next level.

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How to Pay Off Your Loans Fast to expand your business

However, if you don’t pay it off quickly, you could find yourself paying more than you originally anticipated in interest. It will also affect your credit rating, making it harder to acquire a loan next time. Here’s how to quickly pay off any type of loan, so that you can avoid these pitfalls.

Increase Your Payments

It is possible to speed up your repayment time, without even thinking about it. Simply take your repayment amount and round it up to the nearest hundred dollars. For instance, if you are paying $475 a month, round it up and make payments of $500. You won’t miss the extra $25, but over a year that’s an extra $300 repaid.

You can achieve the same effect by tracking loans in a spreadsheet and then adding an extra payment each year. In the above scenario, continue paying your debt as usual, but make one extra payment of $300. Over a few years, that’s an extra couple of grand knocked off your total debt.

Consolidate Your Debts

Crediful recommends combining several debts into one easy payment. Once you do this, you will usually end up with an interest rate that is lower than your other debts, so you’ll pay back less. Furthermore, it simplifies the whole process. You can pay it back online by setting up a single direct debit. This allows you to more easily track your payments and increase them if you can afford to do so.

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Refinance Your Loan

It is likely that there are lower loan rates out there, if only you can switch to them. With refinancing, you can! You do this by taking out a new loan and using that to pay off the old one, leaving you with just the new loan to deal with. If this is with a credit union offering a lower interest rate, then you can dramatically reduce how long it takes to repay the loan in full.

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Repaying your loan quickly doesn’t have to be expensive. In fact, it will save you money in the long run. It is better to make a few extra payments each month and decrease the debt more quickly over time. Consolidating or refinancing your debt can help to reduce the interest rate, making it easier to pay it back quickly and helping your business to grow.

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