Usually, Most of the loans in Nepal are taken from Banks, Cooperative Banks, Women’s finance groups (samuha common in Nepali), and with trusted peoples. People in the village usually take loans from Women’s finance groups(samuha). If you are Nepalese, and you owe a lot of money towards a large loan. Whether that means managing lakhs of credit card debt, having a large mortgage on your behalf, or paying off a mortgage every month, a mortgage is a part of your life. This means that you are looking at hundreds of thousands of interest rates on loan life. There is also the mental burden of knowing that you owe maybe tens of thousands of Rupees and that you will be repaying a loan in the years to come.
It can all be frustrating – but it doesn’t have to be.
Did you know that there are simple strategies you can use to reduce the burden of loans?
With the right technique, you can pay off your mortgage, house loan, education loan, credit card debt, or any other debt you are carrying faster than you thought possible. These strategies will not hurt your finances in any significant way, but they can make a huge difference to the full interest you will pay in the life of the loan and help you get out of debt quickly. You could spend a lot of money each month, spend your hard-earned money on things you want instead of investing it and live without debt faster than you dreamed of. Everything is possible!
1. Eliminate extra small expenses
The first thing you should do to pay off your loan quickly is eliminating extra small expenses. Record your all-extra expenses in MS-excel or in Paper. You should save that money for your loan payments.
2. Make payments twice a week
Instead of making monthly payments to your loan, send half paid every two weeks.
The benefits of this method are twofold:
- Your payments will be used more often, so less interest can be earned.
- You will be paying 26 half-payments per year, which translates into an additional full payment annually, thus reducing the life of the loan by a few months or even years. If you choose this option with a 5-year mortgage, you can reduce it to 3 years.
3. Add up your monthly payments
Combine your monthly payments to the nearest Rs: 5000 for an easy way to reduce your loan. For example, if your house loan costs you Rs: 20000 each month, bring that number up to Rs: 25000.
To make the most of the impact, consider paying your bills at the nearest Rs10000 if you can.
4. Make one additional payment each year
If the idea of paying twice a week seems daunting but you like the idea of making an extra payment each year, you can achieve the same goal by committing to paying once a year. In this way, you will feel the pressure once a year and will still shorten your loan life by a few months, or even years.
One easy way to make that extra payment is to distribute it throughout the year. Divide your monthly payment by 12 and include that amount in your monthly payments throughout the year. You will be making an extra full payment later in the year when you will never hear a bit.
It can be the best ways to pay-off your loan early. If interest rates have dropped since you took out a loan or your debt has improved considerably, this may be a good choice for you.
It is important to know that refinance is very sensible if it can help you repay the loan faster. You can do this by reducing the life of the loan, an option that you can easily repay with your lower interest rate. Another way to achieve the same goal is to keep your loan life stable and with your monthly repayments, using one of the above methods to reduce the life of your loan.
6. Put all the extra money into the loan
As said earlier you should stop doing un necessary expenses. Nepalese people has no habit of saving amount from drop. They need huge money to save them. Eliminate all the expenses and put all the money in loans. Doing so will reduce the loan period time and interest to pay.
Winning your loans using one or more of these methods will make you shorter and pay less interest. You deserve to save a lot of money!