Short – term loan repayments: how to budget for them effectively

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Short – term loan repayments: how to budget for them effectively Short Term Loans VIEW BEST SHORT TERM LOANS

We’ve all been there — you’re in a pinch and you need cash, quick. You scour the internet for the best online loans. The results include short-term loan providers, such as Bad Credit Loans, Cash Advance, Cash USA, Money Mutual, or Personal Loans.

Online loans are an easy, hassle-free way of getting an immediate stream of money. Short-term loans typically need to be repaid within a year. Given the short time-frame for repayment, creating a budget ensures that you won’t fall further into debt by missing payments.

Some banks do offer short-term loans. However, there are conditions that you must qualify for, such as a minimum credit score and income requirements. The best online direct lenders offer the following advantages:

  • Short-term loans without a checking account required
  • Short-term loans for bad credit
  • Instant approval
  • Money within 24 hours

Once you’ve taken care of your pressing financial matters, you have to figure out how to make short-term loan repayments while staying within your budget.

Short-term loans are a simple way of getting back on your feet again. Budgeting your loan repayments will help you stay there.

Here are 6 tips for budgeting your loan repayments.

By Editorial Team | 6th March 2019
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50/30/20 budget

If you’re not familiar with the 50/30/20 budgeting plan, 50% of your income is kept for essential expenses, such as rent; 30% is used for non-essential needs, and the last 20% is used for short-term loan repayments and other debts.

What ends up happening with this budget is that, instead of using the 30% on frivolous purchases, people often put it toward debts and bills.

Pay more than the minimum amount

Paying the minimum balance on your loans or credit cards doesn’t get you ahead of your debt at all. If your minimum payment is $70 and your interest rate is $65, you will have paid a grand total of $5 on your outstanding debt for that month.

There are two easy options when it comes to paying more than the bare minimum – making weekly payments instead of monthly or doubling the monthly minimum payment.

Home budget planning sheet with pen and calculator
Following a budget gives you more financial flexibility (Picture: iStock by Getty)
Set financial goals

Creating a budget and sticking to it is a great first step on the road to debt recovery. However, it can be easy to get bogged down or distracted if you don’t have clear direction.

Setting financial goals for yourself can be as simple as giving yourself a deadline to pay off one specific debt or the goal of having a specific amount of debt paid off after one year.

Follow the 30 day rule

One way that people end up in debt is making reckless, spontaneous purchases that they don’t really need. Do you really need that flat-screen TV that’s on sale the day after Thanksgiving or those new shoes when you have 500 other pairs in your closet that you never wear?

If there is something that you want to splurge on, wait 30 days to see if you still want to buy the item. If you do, go for it. But chances are you’ll have forgotten all about it.

Pay off the most expensive debt first

Your most expensive debt is most likely the one with the highest interest rate. Once you’ve paid the most expensive debt off, you will have more money to contribute to your other debts.

If your most expensive debt is a credit card, consider canceling the card after you’ve paid it off so you don’t fall back into a debt hole again.

Cash, like this mountain of American dollars, always allows you to feel confident, like a possessor of a miracle cure, capable of solving any arising problem and providing comfort to their owner
Make your finances work for you (Picture: iStock by Getty)
Consider debt consolidation

The most common form of debt consolidation is taking out one large loan to repay multiple small debts. This is a great option if you can secure a lower interest rate for the new loan.

Another way to consolidate debt is to transfer your existing credit card debt to a new card that has a lower interest rate.

Many people overlook the interest rate when applying for credit cards and end up in debt because of the high monthly interest charges. Before you apply for any credit cards or loans, be sure to look over the interest rate and crunch the numbers to see if it is reasonable for your budget.

Conclusion

Research shows that 80% of Americans have debt in some form or another. Conversely, only 30% of Americans have at least $1,000 in savings.

If you follow these tips on how to budget your short-term loan repayments, you can be out of debt in no time.

Written by
Editorial Team
Our Editorial Team is constantly watching for new and exciting services to report on. They aim to bring balanced, honest reviews to the site to give you the best comparisons and ensure you have the knowledge to choose the product right for you. Read more.
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