How to Make Double Loan Payments
Making a double payment on a loan provides wiggle room in the event of a financial crisis. By staying one payment ahead of your loan's repayment schedule, you can keep yourself from falling behind on a payment if an unexpected expense comes up. Most, but not all, lenders accept early payments, so get approval from your lender before doubling up on your loan payments.
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Instructions
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Ask your lender about penalties and fees for early payments. Contact your lender by phone or mail, and review the terms and conditions of your loan.
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Compare your monthly income against your monthly liabilities, including credit-card debt, medical bills and housing costs. Determine how much money you can safely set aside to make a double payment.
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Decide whether you can pay more than the minimum required payment. This will decrease your principal balance faster than paying only the minimum amount due.
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Create and stick with a budget. After you've determined how much money you can reasonably afford to pay toward the principal balance, write out a financial plan detailing the schedule for each double payment.
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Double up on your first payment. Continue to double up or make one full payment each month until you've repaid the loan. This allows you to remain one payment ahead of your payment schedule, and save in interest for at least one billing cycle.
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Pay online or by mail. If you pay by mail, make sure your account number appears on each check, and mail your payment to the address printed on the back of your loan contract.
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Look for savings in interest on your billing statement. The more you reduce the term of a loan through early repayments, the lower your interest costs will be.
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Tips & Warnings
You can keep track of your payments in a check registry or notebook.
Be sure your lender does not penalize you for making early payments.
References
- Photo Credit Andrew Bret Wallis/Pixland/Getty Images
