Save money on your loan with simple changes
Fairstone loan solutions accrue daily simple interest, which means interest builds from the day of your last payment to the day of your next payment (read our article on how daily simple interest works).
With daily simple interest loans, it’s a good idea to make payments as frequently as possible. By increasing your payment frequency, and following the other payment tips below, you’ll cut down on the time it takes you to pay back your loan and reduce interest charges on your account.
Here are four tips to help you save money and pay back your loan faster.
1. Make bi-weekly payments
It may not seem like much initially but there’s a big difference between bi-weekly and semi-monthly payments. Bi-weekly payments are made every other week (26 payments a year), whereas semi-monthly payments are made twice a month (24 payments a year). By making 26 payments rather than 24, you can reduce interest fees and pay your loan back faster.
For example, if you borrow $10,000 with a 48-month loan term at 34.99% and make bi-weekly payments, you’ll save $1,598.23 in interest and reduce your loan term by seven months. However, if you make semi-monthly payments you’ll only save $132.58 in interest and reduce your loan term by one month.
Any amount you make over the minimum payment goes directly toward your principal balance."
2. Round up your payments
Instead of making the minimum payment each time, round your payment up to the nearest $10 (or whatever amount you can fit in your budget). Any amount you make over the minimum payment goes directly toward your principal balance, which will help repay your loan faster. The quicker you pay your loan off, the less interest you’ll pay in the long term.
3. Avoid missed payments
When you have a loan that accrues daily simple interest, missing or delaying your payments can make it difficult to get back on track. Unpaid interest adds up between payments and if you're not paying down your loan, the balance of your loan won't decrease and your interest charges will be higher. If you think you may miss a payment, contact your Lending Specialist as soon as possible (read our article on what to do if you miss your payment).
4. Sign up for online account management
Sign up for online account management for every loan you have with Fairstone. Online account management allows you to view your balance, edit account details, make payments or schedule payments in advance and set up payment alerts to keep organized. There are no payment delays and your information is kept secure. Read our FAQs about online account management to learn more about how it works.
By following the tips above and making changes to your loan payments, you can save money on interest and cut down the time you take to pay off your loan. Contact your Lending Specialist for personalized advice on how you can save money and pay back your loan faster.
This article is for informational purposes only. For personalized financial advice, you should contact a qualified financial advisor.