Reduce the Cost of Your Personal Loans with 5 Easy Methods

Personal loans have become one of the most popular ways to borrow money from banks. This is partially due to the fact that most personal loans are unsecured and that the lenders do not restrict how the money can be used. Most individuals get personal loans in order to purchase vehicles, home appliances, to pay for medical procedures or expensive holidays.

Lenders will even allow borrowers to get multiple personal loans, as long as they qualify. Unfortunately, the fact that it is so easy to get a personal loan also means that most people tend to lose track of their financial obligations and borrow without paying attention to how much the loans cost.

Even though personal loans have relatively low interest rates, having to repay 2-3 of them at the same time can put a lot of stress on your finances. Luckily, there are a few ways to reduce their costs:

1. Use the money in your savings accounts

One of the easiest ways through which you can reduce the cost of your loans is to use the money in your savings accounts to pay them off. However, you will have to check the cost of early repayment.

This having been said, for this method to be truly effective, you must use your savings to pay off your most expensive loans first. Even if your savings are enough to only repay a single loan, by choosing the most expensive one you will mitigate a lot of financial pressure.

As for the loans that remain, you will be able to reduce their cost by using the methods presented below.

2. Switch to a less expensive loan or one that has a shorter term

Most lenders will allow you to get another loan that you can then use to repay an existing one. The objective here is to either get a loan that has a lower interest rate than the one that you are currently paying, or one that has a shorter duration. However, if you intend to use this method, you will also have to factor in the early repayment fee that the bank may impose.

Using credit to consolidate loans can be a great way to save money.

3. Use the money from a line of credit in order to repay a loan

Lines of credit offer the advantage of only having to pay interest for what you borrow. If you already have access to a line of credit, check the interest that you are currently paying for the loan. This method is only useful if it is higher than what you would pay if you were to repay it using the money from the line of credit. You could also consider no credit check loans as an alternative.

4. Get a debt consolidation loan

Getting a debt consolidation loan is both easy and effective when it comes to reducing the cost of your existing loans. These usually have relatively low interest rates and can be paid over the course of 10-15 years. Although they may be more expensive to repay in the long run, they require smaller monthly payments.

5. Make extra payments to repay existing loans

While a loan may have an early repayment fee attached to it, you should still be able to make a few extra payments at no extra cost. This will allow you to repay it early, however, you won’t be able to completely return all the money at once. This method is usually better if you want to make a loan cheaper in the long run.


Generally speaking, the faster you repay a loan, the less money you will spend on it. However, if the repayment fee is too high, you can always mitigate the cost of a loan by either refinancing it or by consolidating your debt. The methods that we have presented can be used separately, but they are the most effective together. For example, it is better to use your savings in order to repay your most expensive loans and then to consolidate the remaining ones.

The Most Efficient Ways to Repay Your Debt

It is difficult for most individuals to go through life without getting a personal loan or a mortgage, however, repaying that debt can be even more difficult. This is especially true for those who take out multiple loans that put a lot of strain on their finances. Luckily, there are a few methods that you can use in order to keep your debt under control. Each of them is useful in its own right, however, if you want to be truly efficient when it comes to how you repay your debt, you should try to use all of them:

1. Establish your priorities when it comes to repaying your debt

If you have taken out multiple loans or have different types of debt, it is likely that you will have to pay different interest rates. This makes it essential to prioritise your debt. Generally speaking, you should always try to pay off your most expensive loans first. Select the one that has the highest interest rate and is worth the least amount of money. This will allow you to take off some of the strain on your finances and make it easier to repay larger loans that have a longer duration.

2. Consider getting a debt consolidation loan

Almost all banks offer these loans and they can be invaluable when you have a lot of debt. They are usually long-term loans that can be paid in as much as 10-15 years. In terms of value, a consolidation loan should allow you to borrow enough money to repay at least one or two of your existing loans.

This having been said, when it comes to debt consolidation, you should pay off your most expensive types of debt first.

There are lots of debt consolidation products out there.

3. Consider getting a line of credit and using it instead of a credit card

Lines of credit are orders of magnitude more affordable than credit cards, provided that you’re smart about using them. They often have great terms and conditions and you only pay interest for what you actually use. In other words, if you get a £10,000 line of credit and take out £500, you will be charged a minimal administration commission each month, but you will only pay interest for the £500.

The entire amount is always available to you, but if you either do not use any part of it or repay the money until the end of the month, you won’t pay any interest. Just like credit cards, lines of credit offer a lot of freedom in terms of what you can do with the money, provided that you get a good deal from the bank. This means that you will also be able to use it in order to pay off your credit cards or smaller short-term loans that you might have.

The main disadvantage when it comes to lines of credit is the fact that they are secured, and that you need to have a relatively good credit score in order to get one.


These three methods will help you keep your debt under control and may even raise your credit score in the process. As mentioned at the beginning, it is not necessary to use all of our suggestions, however, they do complement each other. By prioritising your most expensive loans and paying them off first, then consolidating your remaining debt and, lastly, using a line of credit to repay your credit cards, you will be able to better manage your debt and make it easier to return the money that you’ve borrowed.
As a bonus tip, lines of credit are often long-term commitments, so you can use them even after you’ve repaid your loans. Once you solve the issue of your debt, consider giving up your credit cards, and only use the money from the line of credit.

Important Things to Know about Short Term Loans

There are times when the roof of your house starts leaking, and you do not have the cash to have it repaired immediately. Or your car might need urgent costly maintenance. These situations could prompt you to take a loan so that you can have your roof or car fixed. If you do not have any savings, you can seek the help of your family or friends. If they cannot help you, your best option is to take a short term loan.

What to Know About Short Term Loan?

Short term loans are similar to payday loans because both are short-term loans. However, even those that do not have regular work can qualify for a short term loan. Since a credit score and security are not part of the requirements, applying for this type of loan is quick and easy.

Several online lenders offer short term loans. Before applying, make sure to compare the Annual Percentage Rate (APR) and the repayment terms. Not all lending institutions charge the same APR and observe the same repayment terms. Compare several lenders and their APR and look for one that has the lowest charges. Check the repayment terms, such as the maximum length of the payment period, as well as the penalties delayed payments.

Borrowers that have access to the internet can apply online. Once the lender approves the application, you can expect to see on your account the amount that you borrowed on the same date of submission. You can then withdraw the money anytime you want.

Getting a short term loan is easy, but borrowers might have difficulty paying their debt. To avoid costly penalties, keep in touch with your lender if you think that you cannot settle on the due date. Your lender can advise you on what to do tor it might recommend several options to resolve your problem. You can ask for a change in the payment schedule that would make it easier to pay back what you borrowed. Being candid with the lending institution could prevent them from reaching out to collection agencies to recover their money. However, such action can n. have a negative effect on your credit history, resulting in rejection of your loan application in the future.

Short term loans are designed to help the most needy in a timely manner.

Best Reasons to Take Short Term Loan

There are several reasons why some people choose to take a short term loan instead of other types of loans. One reason is that short term loan costs less. Since you must repay it in a maximum of 12 months, you would be paying less annual percentage rate compared to when you must pay it back in 24 or 36 months.

Another reason why some people prefer to apply for short term loans is that the lenders do not require collateral. The basis for approval is your credit history, and in some cases, if you have someone to guarantee your loan. Short term loans also cost less. The longer you pay for the loan, the more you pay in terms of interest.

Short term loans do not tie you up to long years of worrying about the money that you borrowed. If you have long term loans, you might still need to make monthly payments even if you have retired already or even if you are already sickly and cannot earn anymore.

Short term loans would allow you to lay your hands on cash that you can use for your emergency needs. You can save yourself from .high interest rates as well as from the stress of having to make monthly payments for so many years.

How to Save Money the Smart Way?

Most people often ignore how important it is to save money. By putting some of your monthly earnings aside, you can ensure that you will always have enough money to pay for medical procedures, to go on holidays and to almost always be able to buy anything you want. Furthermore, saving money over time can help you eliminate the need to take out loans or to use credit cards. It can even make your retirement completely carefree, as it should be.

Unfortunately, saving money can be difficult, especially if you don’t know how to properly manage your finances. While there are a few methods that you can use in order to save money more efficiently, the most important thing to remember is that you need to have discipline. As many find out, having a lot of money saved up makes expensive products much more tempting. If you want to start saving, avoid using the money that you put aside for as long as possible.

This having been said, here is how you can be smart about how you save your money:

Open a savings account

Savings accounts are extremely useful tools, especially when factoring in the compound interest that you will earn from one year to another. They are also great at eliminating the temptation of using the money that you’ve saved up. Generally speaking, savings accounts can be used for any purpose or period of time, but they are only truly useful if you intend to make monthly deposits for at least 10-15 years.

From a functional point of view, savings accounts do not have any activation, administration, or closing fees, so it won’t cost you any money to open one.

Set goals for yourself

In order to efficiently save money, you will have to set goals for yourself. Look at how much you earn every month and decide what amount of money should go into the account. For example, if you make £2,500 per month, consider making fixed £500 deposits. While it is great if you ever manage to deposit more money, make sure that you never miss your goal.

Making fixed monthly deposits serves two purposes. First, they make it easy to calculate your compound interest. This way you will always know how much money you have to receive each year. Secondly, it will create a habit that will make it easier to reserve money out of your monthly income.

Prioritise saving money

Make a habit out of making your savings deposit immediately after your salary is paid. This will ensure that you do not get the chance to spend the money on other things and will also help you budget your income more easily.

Use apps that help you save money

There are several apps that you can use to round up the cost of your purchases and help you put the extra money aside. These apps are great because they do not affect your spending habits and the amount of money that is moved with each purchase is so small that you won’t even notice it.


Saving money is usually a long-term commitment. Furthermore, the more time you spend making regular deposits in a savings account, the more profitable it will be in the long run. Whether you use apps to help you save money, open a savings account, or simply put the money in a jar, it is important to resist the temptation to spend it.
Always set a purpose for your savings and never spend the money unless it is for that purpose. For example, if you want to put money on the side to purchase a home, do not spend the money on anything else.

Compound Interest – A Simple Explanation for an Important Concept

Generally speaking, compound interest is essentially interest that is earned on interest that has been earned previously. Although the concept may not seem to have a clear explanation, it is relatively easy to understand. Furthermore, compound interest is one of the most important financial concepts there are when it comes to increasing your savings in the long run.

Why is compound interest important?

Compound interest usually comes into play when you open a savings account. In time, it helps you generate increasing amounts of money without you actively doing anything. By using it, you are able to increase the money that you have in your savings account, even when you are not contributing to it. Over time, compound interest can help you reach a point where your savings account will generate enough income to live off of, to a small degree. However, this requires considerable contributions in the first 10-15 years.

What is compound interest?

The best way to explain the concept of compound interest is by looking at a simple example. If you open a savings account and deposit £10,000, this amount is called a principal. With each passing year, you will earn interest based on the principal. This means that with an interest rate of 2.4%, you will earn £240 every year. However, after one year, you will no longer have £10,000 in your savings account, but £10,240. This means that after the second year, you will earn interest based on the updated amount.

This new interest rate is called compound interest. Over time, the amount of money earned from interest will be added to your savings account and what you earn from compound interest will grow. In our example, after the first year, you would have £10,240 in your savings account. By maintaining the same 2.4% interest rate, you would receive £245.76. This new amount of money will be again added to the account and the compound interest would grow after the next year.

Compound interest for debt

Compound interest is also used by certain lenders. This means that you may be required to pay interest on interest that you’ve previously accrued. These loans are often financial nightmares if they span over the course of more than 3-4 years. When compound interest is charged on a loan, it basically means that the longer it takes to repay it, the more expensive it will be.

What is the best way to use compound interest?

Compound interest is great if you open a savings account and make regular contributions. If you start saving early on and try to make large deposits during the first 10-15 years, it is possible to reach a point where you will earn £10,000-£15,000 from compound interest alone. In many ways, a savings account that has a good interest rate can serve as an unending source of money (if you only take out the equivalent of your compound interest once per year) that you can use after you retire.

Earning money from compound interest also gives you a reason to never touch your savings account except for when you make deposits. After all, if you take money out of the account, the compound interest will be lower for the next year.


Overall, compound interest is one of the most important concepts when it comes to your financial life. It can work to your advantage, by earning you increasingly larger amounts of money with each passing year, but it can also make loans considerably more expensive than they initially appear.

As a rule of thumb, always look for savings accounts that have a high interest rate and for loans that do not have a compound interest rate attached to them.