finance 2025-01-15
Effective Loan Repayment Strategies
Learn strategies to pay off loans faster and save on interest.
Smart repayment strategies can save you thousands in interest.
Popular Strategies
1. Avalanche Method
Pay off highest interest rate first- Saves most money
- Mathematically optimal
2. Snowball Method
Pay off smallest balance first- Quick wins for motivation
- Psychological benefit
3. Bi-weekly Payments
Make half payments every two weeks- 26 half payments = 13 full payments/year
- Reduces principal faster
Extra Payment Impact
$200,000 loan at 6% for 30 years:
- Regular: $1,199/month, total interest $231,640
- Extra $200/month: Paid off in 22 years, saves $68,000