If you are looking for the best way to pay off your student loan, there are several useful strategies that you can follow. The most effective method to pay down the loan quickly is to make a larger payment than the minimum amount that you owe every month.
It works because the more money you pay on your loan upfront, the lower amount of interest you will end up owing – and the faster your balance will go down.
Another way that you can make more payments without feeling the loss of the money is to do half of your payment amount every other week instead of waiting to make a full payment once per month. This will allow you to get in an additional full payment every year.
By reducing your interest costs, it will also help you to reduce your schedule for repayment.
If the interest rate on your student loan is higher, you can pay it down quicker by refinancing your student loans. This does not require you to put out more money in additional payments but it can significantly reduce the pay off time. Reducing your student loan interest rate from eight percent down to four percent would help you to pay off your balance around two years faster.
If your credit score is in the high 600 level, then you have a strong chance of being able to refinance for a better interest rate. The lender will also be interested in your income level and history of timely payments on bills.
The worst thing that you can do in paying off your student loans is to be consistently late with or even to miss payments. This will cause late payment penalties and missed payment fees to be added to your total balance.