7 Ways to Get Quick Cash Today
Everyone has their reasons for needing more financial breathing room. Thankfully, it’s never been easier to get cash quickly. Here are 7 ways you can get started today:
1. Surveys, Email, Radio – Numerous websites pay you to do things you may have already enjoyed doing for free. This includes listening to the radio, reading emails from advertisers, and taking surveys distributed by organizations. While there are millions of options when it comes to these methods, only a few are worthy of recommending. The best website is “Inbox dollars”. This company will pay you up to 120$ a year to simply listen to their stations. Once you reach 30 dollars in earnings, they’ll begin sending you your checks in the mail.
2. Quick loan companies – A more traditional way is to apply for quick cash loans. There are plenty of lenders that have to ability to lend cash and quickly. Some lenders can do so the same day while others may take a day to process and fund your loan. Most of the short-term lenders will have higher interest rates compared to a traditional loan.
3. Sharing information with companies – Many companies, perhaps Google being the most well-known, will pay good money for app users to install their app on their iPhone or other device. In addition, for each month that you keep that app on your phone they will send you more money. The reason is that the apps themselves help these companies collect the data necessary to understand the market. By downloading just a few such as “Smart Panel” or “Media Insiders Panel”, you can accumulate up to a few hundred extra dollars each year.
4. Writing to congress – For those who are naturally interested in political matters, earning extra money with a grassroots advocacy group will sound too easy. Groups such as “Next Wave Advocacy” or “DDC Advocacy” have operations that focus on what can be achieved while at home. In order to run grassroots campaigns, they pay people to call and write to government officials or professional advocates. While hours vary, this work could actually turn into a part time job and earn you as much as 20$ an hour.
5. Write for a blog – Take it from someone using this very method right now. Blogs will pay money to have others help them produce their content. Some blogs will even pay up to 100$ per article. Many people doubt that they could ever make money writing because they are not established in the writing world. Well, this is one sure fire way to begin. All you need is a bit of creativity.
6. Old Stuff – Few people don’t have some extra stuff laying around waiting to be used. Try getting rid of it by selling it online to local shoppers. I can’t count how many times I’ve successfully sold an item like an old skateboard, electronic water boiler, coffee maker, or microwave on Craigslist to someone living in my area. It’s the perfect way to get an extra 50 dollars quickly.
7. Some take photos with friends – For those with a naturally photogenic eye, you might really enjoy this newly emerging money making method. First step, find some scenery to capture that is marketable. Take a quality photo and save it. Next download an app called “Foap”. It’s an easy way to monetize your photos. Once someone buys the license to your photos from Foap for 10 dollars, you’ll make 5. Think about it, if that same photo sells many times over, you’ll make five dollars each time, all for a small amount of work in terms of time.
What is a Split Rate Home Loan?
If you’re looking to purchase a house, then it’s about time you research the different kinds of mortgage loans that are available to you. You likely already know that obtaining a fixed-rate mortgage will give you the same interest rate throughout the mortgage’s life while an adjustable-rate mortgage may save you money by its interest rate going down over time. However, you may not be so well versed in split mortgages, which gives you the opportunity to benefit both from both a fixed and variable interest rate. This type of mortgage is a bit more complicated than combining the two different kinds of mortgage types as it entails a level of customization. Let’s take a look at split mortgages.
What Are Common Split Mortgage Ratios?
Typically, split mortgage loans come with a 50:50, 60:40, or 70:30 split between a fixed and variable rate. That being said, it is up to you the amount that you put into each kind of loan. To decide the type of split you want to do, you must determine the amount of risk you’re willing to take on the cash rate potentially going up.
The Lender Margins and Adjustments to a Split Mortgage
Lenders typically include several variables in the loan contract of a split mortgage that will determine the exact mortgage and interest rate payment amount. The majority of lenders will adjust their interest rates on a yearly basis. That being said some split mortgages come with a three or six-month adjustment period. Your lender will utilize an economic indicator, often a market index, which determines the adjustment of your interest rates. Additionally, the lender’s margin; a markup added on top of the adjustable rate mortgage, will also have an effect on your mortgage payments.
Split Mortgage Adjustable Interest Rate Caps
Lenders utilize three different kinds of interest rate caps for the Adjustable Mortgage Rate part of the split mortgage. The first is an initial cap that limits the amount in initial adjustment. The second is a periodic cap that limits any other adjustment throughout the length of the loan. Lastly, there is a life cap which limits the total increase that the adjustable rate goes through from the first increase to the end of the mortgage’s life. Calculating your total mortgage payment amount through the length of the loan period will help you decide if the caps and variables make a split mortgage the right choice for you.
What Are the Advantages of a Split Rate Mortgage?
Split loans are recommended for borrowers that want to lower their interest rate risk in the case of a hike in rates. You are better able to manage your loan when you’re taking advantage of both kinds of loan products. The portion of the loan that is a fixed rate helps with your budgeting since you know the exact amount that you need to pay. On the other hand, the variable loan allows you to pay as much as you want as long as you make the minimum repayment amount. Split rate loans are excellent for property investors, as they can maintain their owner-occupier loan at a fixed rate and then their investment property loan on variable terms to make the most tax deductions on increasing interest rates.
What are the Disadvantages of a Split Mortgage?
You will have low monthly payment in the initial fixed-rate period of your split mortgage. However, you may pay the price later down the road. There may be significant increases in interest rates during the adjustable rate period of your split mortgage. Moreover, you must be careful about the prepayment penalty that lenders may place on your loan. These penalties depend on the amount you take out and can cause disruptions in plans to pay off the mortgage early. This makes this type of loan not ideal if you want to remain in the home for longer than ten years.
Top Up Loan or Personal Loan when you Need Emergency Money?
Facing a financial emergency can be daunting. How do you know what the right method is when you can barely think straight? Generally, you have two options to get the money fast – a top up loan or personal loan. They both have their benefits and times when they are most beneficial. Understanding the differences can help you determine what is right for you during a time that you need money fast.
What is a Top Up Loan?
A top up loan is an extension of an existing product, typically your home mortgage. With this financing option, you simply apply for extra money in addition to money already loaned to you. In most cases, there is not a lot you must do to qualify since the bank already knows your qualifying factors. Typically, as long as you have owned the mortgage for a few years; have made timely payments; are still employed with the same income; and your property value has not decreased, you are eligible. Most banks will maximize the amount you receive at 70 percent of the property value. The top up loan is a new product, though; it pays off the existing mortgage and starts a new mortgage at the new amount.
When is a Top Up Loan Better?
There are times when a top up loan is a better option than a personal loan, just like there are times when the opposite is true. Generally, if you have a good payment record on your mortgage, the top up financing is the best choice because the interest rate charged is typically much lower than you would receive on personal financing with no collateral. Due to fact the bank already knows you and your propensity to pay your bills on time, they are more willing to offer a lower rate in exchange for the security in your home. If you are facing a serious emergency where time is of the essence to receive the cash, this is the quickest option as well, as there are not a lot of qualifying factors you must go through. In fact, many banks offer the ability to apply online and get the funds in a very short amount of time.
When is a Personal Loan Better?
A personal loan has its time and place as well. If you need more money than would be allowed on your top up loan because of the outstanding balance on your mortgage versus the value of your property, this might be your only option. Another time that a personal loan would be a better option is if you plan on moving in the near future – say within the next few years. Due to the fact the top up financing takes away the equity in your home, you will have fewer funds to put down on the purchase of your next home, which could limit your options in home ownership. It pays to give long, hard thought to whether or not you will be moving, especially if it will be to a higher cost area as your choices will be limited as a result of your lack of equity.
In order to determine which financing option is right for you, you should weigh your options. Compare the interest rates and terms against one another and then consider your future plans as they all play a role in what is the right decision for you. Sometimes a lower interest rate is not in your best interest if you know you will need the funds in the near future to put down on another home. On the other hand, a lower interest rate could help you save more money every month, making the loan much less expensive in the long run. There is no straightforward right or wrong answer for everyone – you must weigh the options for your individual situation to determine what is right for you.
How to get a Better Interest Rate on a Bad Credit Personal Loan
If you’ve decided to take out a bad credit loan, then you likely know that it comes with less than perfect terms than that of a traditional loan that you would receive from a bank or credit union. However, often when you have a bad credit score, you are left with no choice but to take out this type of loan, despite its notoriously higher interest rates and bad terms. That being said, you can do a few things to ensure that you get the best terms possible on a bad credit loan so that it will not weigh your finances down too drastically. Here are a few ways to ensure that you get the best interest rate possible on your bad credit loan.
Know Your Credit Score and History
Before you start filling out an application for a bad credit loan, you should know what is on your credit history. Could your low credit score possibly be caused by an error on your credit report? It is not uncommon for errors to pop up on credit histories and so it is imperative that you check before going ahead with your bad credit loan. Look at your credit report a few months, or at least weeks, before taking out a loan so that if there is an error, you have time to dispute it and raise your credit score, and thus potentially make you eligible for a regular loan.
Concentrate on Your APR
Loan rates are usually shown as an annual percentage rate, otherwise known as an APR. This APR includes all of the fees and the interest combined so that you can easily compare loans. The lower the APR, the more money you save. Make sure to take the time to do your homework and compare bad credit loans’ APRs before choosing one so that you can snag the best deal. You can use an online loan calculator to try out different loan amounts, loan terms, and interest rates to see what exactly you’ll be dealing with for each loan.
Don’t Just Compare Interest Rates
You should not just be looking at the interest rates of bad credit loans, but the terms as well. Make sure that when you are comparing loans, you factor in which ones have the better conditions. In some cases, a worse interest rate is worth it if it means getting better terms, as it could make the loan more manageable than otherwise. Make sure to check websites and online search tools for a comparison of loan terms.
Focus on the Total Cost of The Loan
To avoid falling into the financial trap of not being able to repay your bad credit loan, it is important that you do not just focus on the amount you will be paying per month, but instead the total cost of the loan. This includes the amount you spend on the interest rate. In other words, make sure that you look at the whole picture of a bad credit loan, and not just what you’ll be dealing with on a month-to-month basis.
Put Up Collateral
One of the best ways to lower your overall loan amount and your interest rate when it comes to a bad credit loan is to put up collateral for it. The main reason as to why the interest rate on bad credit loans is so high is the fact that lenders put themselves at greater risk by lending money to you due to your low credit score. You can negate this by putting up collateral, such as your house or car. However, keep in mind that doing so is risky, since if you end up not being able to repay the loan, the lender has the right to repossess whatever you put up as collateral.
Tips for Covering Your Assets When Using a Collateral Loan
A collateral loan is a type of loan that is secured by an asset under your ownership. You are essentially promising to give up the asset in the case that you are unable to repay the loan during the agreed upon time frame. When you promise your collateral, the bank considers you less of a risk, which makes it easier for you to obtain the loan. However, when weighing this option, it’s also important to think about the worst-case scenario, which is that you are unable to repay the loan. In this situation, you must know the best means of protecting your asset so that it is not repossessed if you do not pay back the loan on time.
Understand the Risks Beforehand
It is critical that you fully understand the risk you are taking on by using a collateral loan beforehand. You are taking on the risk of losing your assets in the case that you loan defaults. Due to this, it is crucial that you discuss these risks with a financial advisor, as well as those who would be affected by losing the asset. Doing so will help you better understand whether or not taking out the collateral loan is worth it in the first place. A financial advisor will aid you in assessing the risk you are taking on, as well as the probability of the loan being repaid on time. It is important to be honest with yourself and know your situation.
Negotiate If Possible
If you have a decent credit history and are a qualified borrower, then you’ll likely be able to get a loan with commitments that are favorable and that you are comfortable with. Keep in mind that you can always reject a bank’s offer and look for a loan from other lending institutions. Banks are usually conservative when it comes to the value of your assets, and so it may be worth your time to request another appraisal review, which will comment on the bank’s accuracy of the evaluation. Also, be very aware of predatory lending practices that can easily end up with you being unable to repay the loan on time.
Don’t Be Discouraged By Late Payments
Know that just because you make a late payment does not necessarily mean that your collateral loan will automatically go into default. Although loans vary, some agreements state that your loan will enter default after just one day late of making a payment. However, many do not enter into default unless you do not pay for 30 days or even more. Due to this, it is highly recommended that you search for a collateral loan that has a lenient policy when it comes to late payments, as this will protect your assets from repossession.
Reinstate Your Loan
In the case that your loan goes into default, all may not be lost as you may be able to reinstate the loan. If you can reinstate, then you can prevent your asset from being repossessed or if it has already been repossessed than you may be able to get it back. Reinstatement allows you to bring the collateral loan back to current by paying all of your late payments, including the late charges and applicable fees. This is typically done through one lump sum. Keep in mind that not everyone has the right to reinstate their loan, as some states do not allow it.
Negotiate With Your Creditor
You may want to consider talking with your lender and finding out if there are any opportunities to avoid repossession in the case that your loan goes into default, and you have no other alternative. Some creditors would be willing to negotiate with you to find an alternate way of settling the debt instead of repossession of your asset. In some cases, they may be even willing to reduce the debt so that you can repay it.
What is an Adjustable Rate Mortgage Loan?
The adjustable-rate mortgage loan is not something to automatically turn away from and is often misunderstood, especially with its misconstruction in the media and its general misuse by the public. Taking advantage of an ARM loan in the right circumstance can indeed save you a substantial amount of money on interest. However, using it improperly can cause a slew of financial issues, including the foreclosure of your home. Here is a quick look at the adjustable-rate mortgage.
Defining the Adjustable-Rate Mortgage
As the name indicates, an adjustable-rate mortgage loan is a type of loan that has a rate that changes depending on a predetermined rate. This causes your monthly payments to increase and decrease depending on the rate at the time of the adjustment. This type of loan is different than a fixed-rate mortgage as it comes with the same rate for the length of the loan.
Pros of the Adjustable-Rate Mortgage
In most cases, you’ll start with a lower interest rate than with a fixed mortgage loan. If the interest rate then stays put or even decreases during the length of your loan it could allow you to save money.
Cons of the Adjustable-Rate Mortgage
This type of loan is unpredictable once it enters into its adjustment period since you can never predict exactly how it’ll adjust. You always run the risk of this type of loan increasing during its adjustment. Naturally this will then increase the amount you have to pay each month on it.
Scenarios Where Adjustable-Rate Mortgages Make Sense
In some scenarios, adjustable-rate mortgage loans can end up saving you money. If your plan is to remain in your house for only a few years, then you may be able to secure the lower interest rate through an ARM loan rather than a fixed-rate mortgage. For instance, if you plan on remaining in your home for three years you could choose a 3/1 ARM in order to secure a lower interest rate. If you then move after the three-year period and sell your home, you’ll still be within the initial rate period, and so the rate would not be changed. Essentially, you will be able to maintain your mortgage during the fixed period and then sell the home before the interest rate adjusts. However, keep in mind that this strategy requires that you be able to sell your home.
Scenarios in Which Adjustable-Rate Mortgages Do Not Make Sense
If you are planning on remaining in your home for an extended period, then you’ll benefit more from a fixed-rate mortgage. Although you’ll have to deal with a higher interest rate in the first couple of years compared with an adjustable-rate mortgage, your rate will never move. This means that you mortgage payments will stay constant throughout the term of your loan. On the other hand, if you utilize an adjustable-rate mortgage loan in the long-term, you’ll have to deal with interest that changes periodically, and usually upwards instead of downwards.
Common ARM Loans
The majority of ARM loans are a type of hybrid loan. This is because they start with a fixed rate and then the rate adjusts. It is typical that these loans are labeled with a number that indicates the fixed-rate period in years and then indicates how often the payment and interest rate changes. For instance, a 3/1 ARM will start out with a fixed rate in the first three years of the loan. After which time it will change each year.
What is a Rate Cap?
This term is also sometimes called an interest rate cap. It is a feature that caps off the amount that your interest rate increases. There are two kinds of rate caps one is for the loans lifetime, and the other is periodic. The periodic adjustment cap determines the maximum amount that the rate can increase from a single adjustment period. The lifetime cap defines how much the loan can increase over its life span.
5 Questions to Ask Yourself Before Purchasing Loan Insurance
Loan protection insurance is created to aid policyholders through financial support if they are ever unable to support themselves. The need for a payout must be substantial such as because of unemployment or disability. This type of insurance can come in handy to continue your monthly loan payments and protect you from defaulting on your loans if you are unable to make payments yourself. Before you continue with the purchasing of this type of insurance, you must ask yourself a few things to ensure that it is the right financial decision to make. Here are five questions you should ask yourself before purchasing loan protection insurance.
1. Do You Know Exactly How this Type of Insurance Works?
Before you purchase this kind of insurance its important that you know exactly how it works. Loan protection can help you maintain your monthly debt payment up to a set amount. This type of policy is meant for short-term protection, so it provides coverage between 12 and 24 months depending on the insurer and policy that you choose. If you need coverage for a longer period of time, then this type of policy likely isn’t the best for you. This kind of policy can be used towards car loans, credit cards, and personal loans and is typically for those who are between the ages of 18 and 65 and are currently employed.
2. Which Type of Loan Insurance is Best For You?
There are two types of loan insurance to choose from, and so it is important that you consider both to find the best one for your financial situation. The first is a standard policy that doesn’t take gender, occupation, smoking habit, or age into consideration. You can decide how much coverage you want with this type of insurance. The second type of insurance is an age-related policy. This kind of insurance takes the amount of coverage and age into consideration.
3. Can You Afford the Cost of Loan Insurance?
To obtain loan insurance, you must be able to afford the cost of it. The cost of loan insurance depends on where you are located and the type of policy you obtain. Additionally, it depends on the extent of the coverage that you choose. However, in general, loan protection can be quite pricey. If you have a low credit score, then bear in mind that you may have to pay a higher premium. Your premium will likely be higher if you purchase it through a large lender or bank rather than an independent broker.
4. Are You Obtaining Loan Insurance For the Wrong Reasons?
If you are purchasing this type of loan insurance with the hope that it will lower the interest rates on your loans then think again. Obtaining loan insurance will not necessarily aid in reducing your loans’ interest rates. Be wary of any loan providers who try to claim that obtaining loan insurance will decrease your loan interest as they are merely attempting to get you to buy a policy. In reality, any lowered interest rate will be latched onto the loan insurance so that it gives the illusion that your interest is reduced when the costs were simply transferred to your loan insurance.
5. Have You Read All of the Loan Insurance’s Exclusions and Clauses?
It is imperative that you review all of the exclusions and limitations of a loan insurance policy before you even considering whether it is right for your situation. Keep in mind that if you are working at a job that has employee benefits then you may not even need loan insurance as your employment may cover it through their disability insurance.
5 Pitfalls of Interest Only Loans
An interest-only loan is a type of loan in which a borrower solely pays the interest on the principal balance for a specific amount of time. That time period is typically 3, 5, or 10 years. The principal payments will then kick in at a higher amount. This loan has many advantages. The monthly interest payments are typically low for the length of the interest-only period. Those particular payments are also tax-deductible. This loan allows a borrower to make a large purchase while retaining the majority of their money for other investments. Essentially, you can buy a more expensive home for a smaller amount of money. There are also disadvantages associated with an interest-only loan.
1. Lack of Equity
Jack, a pharmaceutical sales rep, and his homemaker wife Jill have been married for several years. They have been saving for a house while living in an apartment. They decide to purchase a home with an interest-only loan. After several negotiations, they settle on $300,000 with the sellers. The couple borrows $240,000 based on Jack’s future income as a District Sales Manager. If they had a traditional mortgage, Jack and Jill would pay their home’s accrued interest along with a small portion of its principal. They would gain equity on the home with each payment made. However, because they are only paying the interest, there is no equity and they are not gaining anything. They are simply servicing a debt.
2. Home Values
When Jack’s company implements a hiring freeze, he is no longer eligible for the District Sales Manager position. He and Jill are forced to sell their home and move to a smaller one. They paid the interest-only payments faithfully, but that did not reduce the principal balance of the loan. In the time that they lived there, the home lost value significantly. They still owe the $240,000. They do not get their full $60,000 down payment back. If the house ends up being worth less than $240,000, they will have to pay out of pocket when the house sells. That is definitely a pitfall no one wants to experience.
3. Spending vs. Investing
An interest-only loan is very attractive, particularly to young married couples. They are starting a new life together and naturally want to purchase a home. Joe, a young groom, discusses the terms of this unique loan with his young bride, Mary. They decide that it is an ideal solution to obtaining their first home. After a few interest-only payments, the young couple is ecstatic about the surplus in their joint checking account. Instead of placing it in an interest-earning savings account or purchasing stocks, they hire a contractor to build a patio deck. When the interest-only term expires, the higher principal payments begin in addition to the interest. Joe and Mary will struggle to pay their “new” mortgage if they do not curb their spending habits.
4. Adjustable Rates
An interest-only mortgage may have an adjustable interest rate rather than a fixed one. This lessens the risk for the lender but puts the borrower at a major disadvantage. An adjustable-rate mortgage (ARM) can have payments that vary from month-to-month or year-to-year, depending on how it is set up. Predicting payment amounts is impossible; if the rates skyrocket, the payments can become unaffordable for many people.
5. Balloon Payments
Some loans also come with what is called a balloon payment. The beginning of this loan looks the same as other interest only loans, requiring you to pay strictly interest. When it changes in 7 to 10 years down the road, a lump sum principal payment will be due. Sometimes this balloon payment is required at the end of the term, but the term is shorter than your standard 30-year mortgage. This leaves you owing a large sum of money in a few short years unless you refinance before that time. Regardless of whether or not you elect to apply for an interest-only loan, please do your homework on all of the advantages and disadvantages.
Student Loan Forgiveness Tax Consequences
One benefit that many students take advantage of is student loan forgiveness. However, loan balance forgiveness is not as straightforward as you may initially think. When a lender forgives your student loan, the IRS puts down the forgiven loan as income, which is then taxable in most cases. If your situation qualifies you for Public Service Loan Forgiveness or an alternative Loan Repayment Assistance Program, then you can rest assured knowing that these types of programs are tax-free. Unfortunately, anyone else who attempts to gain forgiveness from a PAYE or IBR will have to deal with his or her forgiveness being taxable. Luckily, there are some ways of minimizing your tax impact from student loan forgiveness.
The Impact of Taxable Loan Forgiveness
No matter the size of your student loan, if you qualify for PAYE or IBR and have been actively participating than the balance of your loan will automatically be forgiven. That amount is then written off and will be treated as income on your tax revenue in the same year. This indicates that if you made $60,000 in a year from your adjusted gross income, and your loan forgiveness was $20,000, your taxable basis will be $80,000. This means that instead of owing money on your student loans, you’ll instead owe money to the IRS. Unfortunately, they tend to be more powerful than student loan debt collectors, and they are not as patient in receiving the repayments.
How to Minimize Your Tax Impact on Your Student Loan Balance
The most important thing is to maintain your loan balance to a manageable amount that you can keep under control so that you can minimize the total amount that needs to be written off. You may have to let the student loan debt accumulate so that you can maximize the amount that can be forgiven. However, always keep in mind that this will maximize your tax impact during the year that your student loan is forgiven. For instance, if you borrowed $30,000 in student loans, it is entirely possible that this principal can grow to over $100,0000 and the higher your student loan balance, the more you’ll take a hit on your taxes.
Minimize Your Tax Impact to Avoid Interest
The worst thing that can happen to your student loans is interest capitalization. This essentially is compound interest in which interest is charged for interest. This can cause problems even if you are on PAYE or IBR, as the payments that you qualify for will likely be less than the interest that accumulates every month. If you only pay for this amount than your interest that isn’t covered will accumulate and thus be capitalized. Capitalization occurs when the interest that goes unpaid gets put towards your student loan balance, and thus interest starts piling onto your interest. To avoid this, you should attempt to pay the interest on your student loan every month.
What Happens if You Cannot Avoid a Major Tax Impact?
In the same year that your student loan balance has been written off, you will receive a 1099-C that will indicate the amount that your student loan was forgiven. This will then need to be included on your 1040. If you are unable to pay the taxes on your loan forgiveness, then you’ll have a couple of options. You can ask for more time to pay your taxes and then get together a lump sum to handle the IRS debt. You may also ask that your taxes be made into a monthly installment plan so that their effect is not as drastic on your finances. However, realize that this will cause you to have more penalties and interest associated with your debt.
6 Simple Ways to Lessen the Burden of Student Loan Debt
As you change out your book bag for a briefcase and prepare to enter into the real world, a harsh reality will hit—you must pay back your student loans. On top of this, more people than ever before earn a college degree, and so sticking out from the crowd is becoming increasingly difficult. On average, those who take out loans for their undergraduate degree are in debt by $29,400. Although the government has attempted to address the rising problem of student debt through debt forgiveness and borrowing funding models, these have not eased the problem. However, if you are graduating or have already graduated college with a considerable amount of student debt, there are some tactics you can use to lessen the burden of your student debt.
1. Pay as Much as You Can Afford
It is recommended that you realistically look at your budget and determine a payment plan that you can afford for your student loans. If you are in the phase of figuring out how much student loans to take out, keep in mind that you should not take out more than what you make in your first year out of college. Additionally, keep in mind that if you decide to repay your loans with a lower monthly rate, it will result in you paying more in interest.
2. Avoid Using Private Loans
Private student loans are different from federal loans in that they have variable interest rates. This means that the payment rates and interest paid on the loans can increase throughout its life. Although a private loan may have a lower interest rate in the beginning, it is not likely that it’ll remain that way throughout the duration of the loan. On top of this, private student loans do not have as good of repayment alternatives and zero debt forgiveness opportunities as federal loans.
3. It is Better Late Than Never for Scholarships and Grants
Entering into college you may have applied for every grant and scholarship under the sun, but there are also many opportunities to apply for scholarships while attending school. Be on the lookout for funds that are given to students that are studying in a certain field or look for extracurricular organizations that may offer their own scholarships to students. Try talking to your financial aid advisor to figure out what scholarship opportunities could be out there for you. If you can receive additional funding, it can go a long way in helping you lower your overall tuition bill.
4. Look into a Loan Forgiveness Program
You may be able to pay off your student loan debt quickly if you qualify for a forgiveness program. One of the easiest ones to qualify for is the Service Loan Forgiveness Program held by the US Department of Education. This program is in place to encourage people to work public service jobs. You can also look into joining the military, Teach for America, or the Peace Corps for loan forgiveness. If you do not want to work in public service, then there are still plenty of options such as working in low-income areas as a health professional, which can get you up to $160,000 in loan forgiveness.
5. Make Payments Twice a Month
Many people make payments twice a month on their mortgage payments to cut down the length of their payment term. However, the same concept can be used for student loans. By making your student loan payments twice a month instead of monthly you can pay a substantial amount less in interest. By paying off your loan every two weeks, you’ll be making 26 extra payments every year, which makes you much closer to getting rid of your loans altogether.
6. Use Tax Benefits to Your Advantage
As far as paying off your student loans, talking to an accountant may get you a sizable deduction. When tax season rolls around, you can deduct the interest paid off towards your student loans, and thus receive a nice return. In fact, you can deduct as much as $2,500 off of the student loan interest. Taking advantage of tax deductions lets you negate a lot of the interest that gets added onto your loan every year that it isn’t paid off, and so you can lower the time that it takes to repay your loan.