Cut your Loan Term in Half

How to Cut your Loan term in half.

There are numerous tips and tricks to pay off your loan faster. Here’s a super one that if followed is guaranteed to cut your loan term in half. It’s not one that I have revealed before and is not well known, but it’s so powerful.

This simple process will reduce the term of any loan in half and save you substantial amounts of interest. It will work on a home loan, a personal loan, car loan, even a credit card if applied correctly.

Each time you make a loan repayment, part of the payment is used to pay interest and part to reduce the loan balance. In the early stage of a loan, the bulk of your repayment is used to pay the interest cost and a small amount to reducing the loan balance. As the loan term progresses the amount of interest slowly reduces and more paid off the loan.

Here’s the big trick; If you make an additional repayment each payment period that is equal to the amount of the loan balance that has been paid from your loan repayment you will reduce the term of the loan in half.

How do you do this? Pay close attention to your loan balance, in particular the day the interest has been debited to your loan account. Record this figure. Then, look at the loan balance on the day interest was charged on the previous month. Deduct the latest balance from the previous balance and you have the amount the loan reduced over that period. Now simply make an additional payment into your loan equal to that amount.

This simply process will cut your loan term in half.

Give it a go. It’s worth the effort.