How To Pay Off Personal Loan Quickly Before The End Of The Year
Jan 20, 2021
Having a personal loan isn’t considered a bad debt unless it burdens you financially.
In fact, having a personal loan can increase your credit score if you’re proving to be a diligent customer. The reason is that paying your installments on time every month shows financial institutions that you’re a trustworthy person.
But there are many reasons why you’d want to pay off personal loans as fast as possible.
For instance, your current installment can deter you from obtaining a larger loan according to the TDSR rules in Singapore. Alternatively, you may have undertaken too many personal loans that are burdening your expense budget and you might need a debt consolidation loan to help.
Don’t despair; you’ve come to the best page that can help you!
We’ll show you how to pay off personal loans quickly and seamlessly so that you can start the New Year debt-free. Read along!
1. Minimise Unnecessary Expenses
The term ‘unnecessary expenses’ is very subjective, and it usually refers to leisure spending that’s not of crucial importance. You can include in this category all the things that you can compromise on, such as:
- Dining out at expensive restaurants
- High-cost gym memberships
- New clothes
- Exotic trips
But here’s the thing. To minimise those unnecessary expenses, you have to spot them first, and that’s why you need a clear budget.
Here’s a quick example:
A classic mani-pedi costs at least $50 – that’s $200/ month. Add to that your daily workday lunch for another $150, and you get $350/ month that you could be investing in your loan.
Alternatively, you can use the MRT for a few months and only take your car out for just emergencies if that saves you some cash.
2. Side Hustle
Side hustling has become increasingly popular in the last few years, and you can use this method if you feel like you can’t cut back on any more expenses. But how will you get a second job when you already have a full-time job that takes up most of your time?
Most websites suggest this solution condescendingly, seemingly without realising how much work and stress stems from securing another part-time employment.
So here’s the secret to side hustling:
Pick something you like. Monetise your passions.
Let’s say that you like working out so much that you’ve started learning about clean eating and different training styles. You’re also lifting weights in your home gym every day after work.
So why not create a community of people who are willing to work out with you via Zoom or Twitch? You don’t need to be a professional coach for people to rally and form a community around you.
You can do that with literally any hobby or passion:
- Speaking French or Greek
If you’re into long nature walks, why not take your neighbours’ dogs or kids with you? If you speak French fluently, why not consider online tutoring? And the list can go on.
3. Take A Job That You Don’t Necessarily Like
Here’s the thing:
If you’re doing this second job only by the end of the year until you pay off a personal loan, you can also pick something you’re not crazy about. Think:
- Data entry
- Transcribing documents
- Mowing people’s lawns
- Part-time telemarketer
- Handing out flyers
- Becoming a delivery person
4. Sell Your Things
You probably don’t realise this, but you have a lot of things in your house that you don’t need. Marie Kondo could quickly point at the stuff you’ve hoarded that doesn’t “spark joy” any longer.
So, consider which of the items lying around your home you’re not using:
- A halogen oven
- A wedding dress
- Your kids’ baby shoes or that expensive carrier that always made them cry
- Your roller blades
- A steam vacuum
At first glance, each of these things individually may not be worth a lot, but all of them together will help you pay off a significant outstanding loan. So, you can either:
- Put these things up for sale individually
- Take them to a consignment shop to get a lump of cash faster
5. Rent Your Things
Renting your things is a good solution if you don’t want to part with certain items. For example, you can rent your jewellery, wedding gowns, baby’s toys, lawnmower and so forth. You can also rent a room in your home for a few months or even indefinitely.
On the downside, you have to be prepared with a thorough contract, especially if those things you’re renting have a higher value. In this case, you don’t want someone to run with those things or damage them beyond use – and get away scot-free.
Bonus Method: Debt Consolidation
Debt consolidation is an excellent method of reducing those personal loans that have become too much of a burden lately. If you have multiple open credit card facilities or small loans, you know what we’re saying.
Their installments and interest snowball, plus you have the pressure of tight deadlines.
For example, let’s say you have several loans of $1,000 to $3,000. These sums are small, so probably your moneylenders haven’t given you a long tenure. That also means you’re dealing with multiple installments – if you add them together.
So, in this case, debt consolidation fits like a glove.
While debt consolidation isn’t paying off personal loans altogether, it does take the pressure off your pre-existing debt. Here’s how that works:
- You contact a new moneylender and tell them what you need.
- They repay all of your loans.
- You now owe the new moneylender the same amount but have a longer tenure and more accessible installments. As a result, you can make those monthly payments comfortably.
In Conclusion. How To Pay Off Personal Loans
Let’s say you’ve used the five methods above to gather more money. Now let’s see how you can use that money to pay off personal loans.
If you have just one loan, you can use that cash to reimburse as much of the loan as possible – ideally all of it. If you have several loans, a practical solution would be to:
- Rank these loans according to their principal sums.
- Focus on the smallest loan first. So:
- Pay off the other loans’ monthly installments at the agreed dates, but:
- Put more money towards repaying that smallest loan first.
- After you’ve repaid the smallest loan, take its monthly installment along with the cash you’re saving and put it towards your second smallest loan’s balance.
- Rinse and repeat until all of your loans are paid for.
Alternatively, consider a debt consolidation plan. It’s challenging to pay off personal loans, especially if you have many of them. Besides, you may lack time for a side hustle or second job if your schedule is filled to the brim already. And not everyone has stuff they want to sell or rent – we get that.
That’s why debt consolidation is such a good solution.
Instead of drowning in multiple, tiny debts, you’re getting a break from your monthly deadlines and high installments. GS Credit is here to lend a helping hand if you want to start the New Year feeling less burdened by your loans. Easily apply with us via Singpass.
We’ll help pay off loans so that you can focus on what truly matters: staying healthy and happy, connecting with your loved ones.
Apply to get the best debt consolidation solutions at low-interest rates and flexible terms.