Loan Payments 101
For this post, we’ve teamed up with our partners at Fairstone
When you know you need money and you’re thinking it may be time to get a loan, the first thing that may come to mind is loan payments. How much will your loan payments be? How frequently will you have to pay? And, are there ways to reduce loan payments?
In this article, our partners at Fairstone answer the most common questions about loan payments and give you the information you need to stay in control of your loan.
What are my loan payment options? And, how do I know which option is better for me?
Generally, lenders allow you to choose one of three loan payment options. When choosing a payment option, consider factors like how frequently you’re paid and how you like to pay your current bills. Based on your preferences, one of these loan payment options may be better suited for you:
- Monthly loan payments – you make a payment on your loan the same day every month, totalling 12 loan payments a year. This is a great option for people who are paid monthly or who like to have a predictable repayment schedule since it’ll always be on the same day every month.
- Semi-monthly loan payments – you make two payments a month toward your loan, one halfway through the month and the other at the end of the month. In total, you’ll make 24 loan payments a year. This is a good option if you’d like to make smaller, more frequent payments, but like the regularity of paying on the same dates each month.
- Bi-weekly loan payments – loan payments are made every other week, totalling 26 loan payments a year. Not only is this a great option for people who are paid biweekly, but this option also saves you money over time as you’ll pay less interest. Learn how bi-weekly payments reduce interest charges here.
How much will my loan payments be?
You can try a generic loan calculator to see if you can estimate loan payment amounts, but your best bet is to go directly to your lender. Not all lenders provide payment estimates, but luckily you can visit Fairstone.ca for a no-obligation loan quote. You’ll find out how much your loan payment might be based on the loan amount you’d like to borrow. The best part? It’s free and won’t impact your credit score.
What will I pay in interest over time?
Your interest rate is determined by many factors, including the type of loan you choose, how much you borrow, your credit history and other factors. Unfamiliar with how interest rates are calculated? This webpage is a great resource to learn more about how interest rates work.
You can reduce interest charges by choosing a shorter loan term and a bi-weekly payment schedule. And, any extra payments you put towards your loan will reduce interest charges as well. If you’re interested in paying off your loan early or making extra payments, it’s important to ask your lender about any pre-payment penalties. Luckily, there are no pre-payment penalties on Fairstone’s unsecured loans.
What can I do to stay in control of my loan payments?
If your lender provides the option, automated payments can keep help you keep on track with your loan payments. Once you have the payment schedule set up, loan payments will come from your bank account regularly, without any action from you. With automated payments, you’ll never miss a payment and won’t have to face any late payment penalties or interest charges.
Payment affordability is a key aspect of getting a loan. You want to make sure you’re getting the right loan for you, and that the money you’re borrowing meets your needs and budget. Although it’s great to look at your borrowing options online, it can be worthwhile to sit down with someone to review your financial situation and get a good understanding of your loan options. With Fairstone, you can have both – a free, no-obligation loan quote and a knowledgeable Lending Specialist at a branch near you.
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