One of the best investments you can take is education. In most countries, students have the option to take advantage of education loans to pay their educational fees such as tuition fees, books and living expenses. In general, these student loans have easier repayment methods compared to other types of loans such as personal loans and car loans. Here are more information about student loans.
Despite the easy repayment methods and low interest rates, student debts can still be a major challenge to clear. Unpaid student loans can damage your credit report and credit score for many years. It can make it difficult for you to get other kinds of loans such as personal loans, mortgage and car loans.
Here are a few tips that can help you quickly take care of your student debts.
- Pay attention to the fine prints and the repayment guidelines.
Take note of the details regarding your student loan. These include the interest rate, processing fees, minimum payment, and the duration of the loan among many others.
There may also be other administrative fees such as disbursement fees, late payment fees, cancellation fees and repayment fees. If you remain consistent with your monthly payments, such extra charges will not be a cause for worry. However, it will not hurt to be familiar with them.
- Set a strict budget.
Creating a strict but practical budget is an important step not only in clearing your student loans, but also in being financially independent. Assess your needs, and differentiate them from your “wants”. You may have to cut down such “wants” or luxury items in order to achieve your financial goals. Prepare to make a few sacrifices just until you pay off your loans.
- Make timely payments.
Depending on your education loan and financial institution, you may have different options for your repayment plan. Some banks allow you to pay monthly installments of the principal loan amount and the interest even while you are still studying. If you can squeeze in a part-time job in between your classes, then you can get your student debts out of the way early.
Another option is to pay monthly installments only on the interest while you are still studying. This type of repayment plan is ideal for full-time students. The monthly installments on the principal loan amount will only start after graduation.
Another option is to start paying your student loan after you have completed your studies. There are banks like RHB that allow for deferred repayment. You would not have to worry about paying anything while focusing on your education. However, you will have to pay a higher monthly repayment after you graduate.
No matter what your repayment plan is, remember to always make timely monthly payments. A single late payment can already damage your credit score.
- Make more than the minimum amount of repayment required.
If you can afford to make more than the minimum amount of monthly repayment, then do not hesitate to do so. This can lower the principal loan amount, and also reduce the amount of interest you have to pay over time. Aside from that, this can shorten the period of time you have to pay for the debt. To be sure that the extra amount of payment is deducted from the principal loan, include a written request addressed to your lender.
Learn on how to manage your debts better or how to increase your productivity.
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