Loan debt can be scary, especially if you have other forms of debt too. Knowing how to prioritize your debts and how to pay them off to improve your credit score and to help you chip away at the debt is really important, so take a look at this guide to controlling loan debt to learn exactly what you need to do to get your debt back under your control.
Know Your Enemy
Instead of burying your head in the sand, take a look through your bank statements and any statements from your lender to learn exactly how much debt you’re in. If you don’t know how much you have to pay, you won’t be able to start making the necessary changes in order to control that debt. Know your enemy and at least you know what you’re up against.
Making the Minimum Repayment
At the very least, each and every month you need to make the minimum repayment. It won’t shift your debt and it won’t shift it quickly, but at least you’re making a contribution to paying the debt back. This really only makes a dent in the interest, but making the minimum repayments ensures that you won’t get into further debt and it will also help to improve your credit score, too.
Paying What You Can
If you can afford to pay $50 a month for example, at the very beginning, set up a direct debit so that you continue to pay $50 each and every month. Minimum repayments change massively depending on how much debt you have left and the less you have to pay back, the less you have to pay each month – but this also means that it’ll take much longer to pay the debt back. Paying back $50 each month will clear the debt far more quickly, so it’s worth keeping this in mind. You can pay back as much as you like each month, you don’t just have to make the minimum repayment – so don’t let the lender bully you into only making your minimum repayments.
If You Can’t Make Your Repayments
If you can’t make your repayments, make sure that you give your lender a call and explain the situation to them. Failure to do this and failure to make the repayment will simply cause you to miss a payment which will have a huge impact on your credit score. Call them up and explain that you can’t afford to pay the bill this week, or tell them how much you’ll be able to pay. Most companies will be happy to let you do a payment plan as it means that they’re still getting paid – plus, they get to retain you as a customer and they’ll also make interest from you too. People are always kinder than you think they’ll be, so don’t be afraid to ask them if you can set up a payment plan.
If you’re in debt, you really need to reign in your spending. Spend only what you can afford and think clearly about what you really need. You might love those shoes, but do you really need them? No, not if you’re in debt. Spend your money on your bills, making your loan repayments and paying for food for your family. Save up any money that’s left over and make contributions to your debt as and when you can – that way, you’ll chip away it, reducing the debt without putting any additional strain on your household budget.