You might take out a loan for a number of different reasons. You might need to do some decorating or DIY work at home. It could be a new car that you need to finance. Maybe it’s borrowing to pay for an unexpected bill. Whatever it is, you need to keep up with your repayments on the loan. This is so important, so let’s have a look at how you can manage loan repayments.
What Happens If You Don’t Pay?
If you don’t maintain your loan repayments you are risking a number of things. Firstly, you might default on the loan. This means that you’ve missed payments and hence broken the contract of your loan agreement. This can lead to your property being seized in order to cover the amount owed. It will also result in your credit score being damaged and you could end up having to pay more due to fees and charges.
How to Manage Loan Repayments
Direct Debits Are Your Friend
One of the easiest ways to make sure your repayments go out when they are supposed to is with a direct debit. Set this up with your bank for the repayment to leave your account on the same day every month and you’ll be sure to keep up with your payments. It’s hassle free and you’ll be sure that you’re adhering to your terms and conditions without having to log in and send the money manually.
Sort Your Budget
Looking after your money so often means setting a budget and sticking to it. These repayments need to become part of that budget. They must be included just like any other bill. Take an evening or two, pull up all your finances and make a spreadsheet of your money coming in and your outgoings. Make sure to include your monthly repayments on this loan.
Access Your Bank On The Go
How often do you log into your bank? Maybe you don’t even look at your bank balance unless you go to a cash machine? If you haven’t, sign up for online banking so you can organise your finances from your laptop. Your bank might even have a mobile phone app so you can check your money on the go. This will help you get into a habit of regularly keeping an eye on your finances.
Open & Honest Communication
Our financial situations can change overnight. It could be losing your job which suddenly turns your world upside down. Open and honest communication with your bank is much better than avoiding the subject and missing a payment or two. If it’s HSBC Loans you have, contact the bank and see if they can help. They deal with people in different and difficult financial situations all the time and could help you manage your repayments.
Overpayments Clear Your Loan Quicker
If you find yourself with some spare money, overpaying your loan repayments will help you to clear the balance quicker. Overpayments mean less interest, so less money for the lender. This is why you need to check to see if there are any limits to the amount you can overpay. The last thing you want to do is start overpaying and be lumbered with extra charges for doing so.
Use these top tips to manage your loan repayments and you’ll be in a great financial situation moving forward.