How To Repay Loans On Time - A Quick Guide

So, you've taken a short-term loan to deal with unplanned expenses. Congrats! That means you're one step closer to financial freedom.

Still, you'll need to make sure you can actually handle the requirements of your repayment plan so you don't incur additional interest. In this guide, we'll provide a few helpful tips on how to repay loans on time, so you can have extra peace of mind and protect your credit score.

What Is A Loan Repayment?

When taking out a short-term loan, you have the option to pay back the money you borrowed in one or more instalments over a certain period of time. This process is called loan repayment, and your loan repayment plan will depend on the provider.

Loan Repayment Advice

Repaying your loan on time is essential to making sure you keep a good relationship with your loan provider, so you can potentially access their loans in the future as well. Let's have a look at the best ways to ensure you pay your loan on time:

Set Up A Direct Debit

A common reason for late loan repayment is simply forgetting the day you're supposed to make the transfer. Sometimes, short-term loan providers might set up automatic payments for you to make sure this doesn't happen, but most of the time you'll need to keep track of your own expenses.

To avoid forgetting the deadline for your monthly payment, we recommend setting up a direct debit yourself. A direct debit will automatically take money out of your account on the date you specify.

Still, if you set up a direct debit for a specific date, make sure you have enough available funds to cover the payment. The bank might either reject the payment or take your account into overdraft, which will incur further charges.

Budget Around Your Loan Repayments

If you have a loan to repay, then your monthly budget should be built around it. Treat it like any other essential bill you need to pay, so you can make sure you'll have the necessary funds to cover it. Not paying on time due to lack of funds will result in interest added to your loan, meaning it will get even harder to pay back as time goes on.

Check Your Account Regularly

Imagine you get to the deadline of your payment and realise you don't have enough funds in your bank account to pay your monthly instalments. If you are struggling to keep up with all the bills and payments, it's a good idea to monitor your account regularly to make sure you stick to your budget.

Check with your bank provider to see if you can set up notifications when your bank balance drops below a certain amount for an even more efficient budget tracker.

Pay In Advance

Another good way to make sure you don't miss any deadlines is to simply pay in advance whenever you have extra funds available. This way, you might actually be able to pay your loan much faster and save yourself the stress long-term.

Assess Prepayment Penalties

To follow up on our last tip, you should also make sure to discuss with your loan provider if pre-payment is an option. Sometimes, lenders charge a fee for early repayment to make up for the interest they miss out on.

Check your loan terms and conditions or speak to your short-term loan provider and find out if a shorter repayment term is possible. In that case, you'll need to calculate and compare the fees to your regular interest and see if paying in advance is actually more beneficial.

Cut Back On Expenses

If you're struggling to make ends meet and the looming threat of repayment day is causing stress, it might be time to reassess your monthly expenses.

Go through your bank statements to figure out where your money is actually going - you might notice some payments go towards subscriptions you don't use, such as gyms, online streaming services, or magazine subscriptions.

You should also consider pausing any non-essential expenses such as new clothes, traveling, or going out with friends, at least until all your debt is paid.

Increase Your Income

Perhaps an obvious one, but if you need more funds to cover your monthly repayments, you might need to consider getting additional income. There are a few ways in which you can get the extra cash you need:

• Look for a new job with a higher monthly salary
• Ask your current job for overtime
• Get another job on the side (e.g. dog walking, tutoring, freelancing)
• Sell clothes, furniture, or any unused items online

Whatever extra money you get should go towards repaying your loan as fast as possible.

Contact Your Lender

If you find yourself struggling with repayments, contact your lenders and let them know about your financial situation. They might be able to provide alternative options so you can pay your loans in due time without stressing over deadlines. Always remember - they cannot help you if they don't know what's going on.

Consider Payday Loan Consolidation

A popular tactic some people use to repay their loans is payday loan consolidation. In simple terms, this means taking out a loan from a different provider to cover this one. The benefit of this option is that you can choose a better loan provider with lower APR and no additional fees, which means you might actually end up paying less in the long run.

If you are already getting a good deal on your current loan, then this option might be a bit difficult.

What Happens If I Miss A Loan Repayment

Not paying your loan on time can have a negative impact on your finances as a whole. If you miss a loan repayment, you might get:

• Increased interest - the value of your added interest should be specified when you take out a loan, so you don't get an unpleasant surprise later on
• Late fees - on top of added interest, late repayment might incur late fees as well, depending on your short-term loan provider
• Bad credit score - any debt will negatively affect your credit score, which can, in turn, affect your ability to take out personal loans in the future including bank loans and mortgages
• Bad reputation - your provider might not want to deal with you anymore if you are considered an unreliable borrower

If you miss loan repayments repeatedly, your provider might transfer your account details to a debt collector, or even take legal action. This will not only cause a lot of stress but might also result in increased repayment fees which will be even more expensive to deal with.

Make sure to pay your loan on time, and you will be able to enjoy your financial freedom with no complications!

Easy, Convenient Short-Term Loans With Southern Finance

With Southern Finance, you can access quick and easy short-term loans to deal with bills, unexpected expenses, and any stressful financial matters. You won't need to worry about unpleasant surprises - we communicate all fees and interest rates with you upfront for full transparency, so you can plan your budget accordingly and repay loans on time every month.

Use our loan calculator slider to check how much money you can receive and apply today!