How is it better to pay your loan in monthly or biweekly installments?
At the time of canceling a debt or returning a loan, we are only interested in achieving “comfortable installments”. The best way to pay a loan is always related to shortening the number of installments and reducing the interest paid.
When talking about the loan installment it is important to differentiate whether they are biweekly installments or monthly installments. We just need to understand what capital repayment and debt interest payment imply.
What is the best way to pay off your loan?
Deciding between a lower number of installments or reducing interest payments represents the magic formula for establishing the best way to pay off a loan. In the end, the combination of both parameters may be the best way forward. Your financial advisor can become your best friend and show you, with a simple formula, what each of these options implies.
How to set the best way to pay my loan?
When applying for your loan, we all ask one thing: What is the fee I am going to pay each month? A very useful tool in these cases is something that many entities already have to provide that approximate information on the amount of the installments to pay each month, we talk about the mortgage simulator.
This tool will help us estimate the monthly or biweekly amount that we have to allocate to our loan by introducing some parameters such as: the total amount we want to request, the payment term, our contribution and interest rates.
The advantage of knowing this information is that we can organize our payment plan and manage our resources based on the amount we have to separate each month to pay our loan.
What happens if I can’t pay my loan
Failure to pay the installments of a loan, whether personal or mortgage, can never be an option when we have economic contingencies in the process of paying a debt to a financial institution.
It is necessary to take into account the direct consequences and the actions that the banks can take before a default of payment, being able to happen to be in the blacklists of the central of risk, as it is Veraz.
The consequences resulting from not being able to pay a loan may vary depending on the type of debt contracted with the entity:
1. In the case of a personal loan
All of the private assets (housing, vehicles, own accounts, payroll or pension), registered by the creditor, become collateral for the loan received. In case of default, they can be seized by legal action, with the objective of paying off the debt.
2. If it is a mortgage loan
Being able to be on a house or any type of property, the banking entity can request the execution of the mortgage, auctioning the house in the event that the entire loan cannot be canceled.
In either case it is better to approach the financial institution, evaluate the options and negotiate to avoid greater consequences.
Tips for not falling into over-indebtedness while repaying my loan
It will do no good to attend to the commitments of the established loan installments if you cannot stop the consumerist eagerness and resort to new loans to meet superfluous expenses without taking into account your real repayment capacity. The biweekly installment strategies instead of monthly installments may not be enough to save on interest, so it is necessary to change the strategies, so we have some tips with which you can avoid overindebtedness:
– Use a monthly budget and respect it.
– Establishes priorities, respecting the payment of basic services, food, education about other consumptions. You must also honor the debts acquired.
– Eliminates unnecessary expenses, such as interest on credit card consumption or commission payment for card maintenance that you don’t really need.
– Establish your ability to pay realistically, which is a direct measure of your monthly income.
– Gather your debts and attend to the advice of your financial advisor are part of the strategies you can discover. As you can see, the path of financial tranquility begins in conscious planning, evaluating alternatives, requesting efficient advice and trusting your advisors.