Top Tips to Keeping Up with Loan Instalments

If you’re short of cash or are looking to make a large purchase (like a new car or home improvements) then taking out a loan could prove the perfect solution to your problems. Prior to getting the loan it is likely that the lender will carry out a variety of checks to ensure that you are eligible and can comfortably afford the instalments. Providing the lender is satisfied that you meet their criteria then they’ll pay the loan out and you are then in full control of making the repayments.

While at first everything may be plain sailing, and you’re making the repayments without any problems, this can soon be thrown off by the arrival of an unexpected expense. For example, your boiler may break down or you may be hit by a hefty mobile phone bill and before you know it you've paid these and can no longer afford the repayments of you loan. Failing to pay the instalments on a loan can lead to real financial problems. It’s likely that you’ll be hit with late payment fees and charges, your credit history may also be affected if the missed payment is reported to credit reference agencies which could have an impact on your ability to get approved for credit in the future.

Throughout this article we are going to discuss how you can ensure that you keep up with your loan instalments and are never faced with the consequences of missed payments.

1. Set up a direct debit for the day after your payday

Setting up a direct debit very close to your payday is a great way to ensure that you always have sufficient funds in your account when the repayments are due. A direct debit is a payment that is automatically deducted from your account on a weekly/monthly basis, having one in place basically means that no effort is required on your part to make the payment meaning the chances of forgetting to make it is zero.

2. Create a monthly budget

If you haven’t already done so then creating a monthly budget is a great way of putting your finances in order and giving you an overview of where all your money goes. Despite what many think, budgets are in fact very simply to create and really don’t take that much time. By giving yourself a framework for your monthly spend you can also highlight any areas where you may be overspending and take the relevant action.

3. Reduce your outgoings and adjust your budget

If you’re finding that every month you are facing a struggle to make ends meet then it’s likely that your outgoings are too high. This is quite an easy problem to fix; simply take a look at your budget and highlight any areas where you feel that you may be spending too much. The first thing you should look at is you non-essential subscription; things like SKY TV, gym memberships or magazine subscriptions. Ask yourself, am I really getting the most out of these subscriptions or could I get by without them? More often than not these subscriptions simply don’t warrant their cost; cancelling them could leave you £50 to £100 better off each month – depending on how many you've got.

Once you have fully paid off the loan then you may find that there’s room in your budget to afford these non-essential subscriptions once again. However for the time being you’ll probably have to sacrifice these luxuries in the name of repaying your loan instalments.