Make extra repayments so you can exit early
A low-interest personal loan is an obvious way to minimise the cost of your personal loan. But some people don’t realise that you might save even more money by making extra repayments.
Getting ahead on your personal loan repayments can help you pay off your loan ahead of schedule, which can mean ultimately paying less total interest over the lifetime of the loan.
(Please note that, some lenders charge fees for making extra repayments or exiting a low-rate personal loan early, to make up for the interest payments they’d be missing out on. Be sure to check whether getting out of debt with your lender won’t accidentally cost you more than you expected!)
Consolidate several debts into one personal loan
Sometimes, people find themselves juggling a range of debts, from credit cards to car loans. Juggling all of these repayments can be tricky to manage, not to mention rough on your finances, particularly if they are attracting multiple fees and high interest rates.
One way to manage multiple debts is to consolidate them into one personal loan. By using this personal loan to pay off your other debts, you’ll be left with just the one monthly repayment to budget for. If you’re careful and conscientious, you can find yourself debt-free much faster than you may have expected.
Debt consolidation can also reduce the fees and charges you are paying if you have reduced your debt to just one loan.
When you're looking for the best debt consolidation personal loans in Australia, keep in mind that some lenders may not allow all of their personal loan offers to be used for debt consolidation, so be sure to check the terms and conditions.
Play it smart with redraw facilities
Some low-interest personal loans offer a redraw facility, which allow you to ‘borrow back’ money that you’ve paid off ahead of schedule (subject to terms and conditions). As a result, you might feel more comfortable making extra repayments.
That said, redraw facilities need to be used with caution. First, you might be charged a fee to redraw money. Second, every time you use a redraw facility, you’re effectively adding to your loan, which will mean having to pay more in interest.