It’s hard to imagine life without some sort of installment loan. You may have mortgage payments each month or you may be making payments on an auto loan. The key is to know how to manage those installment loans effectively. Doing so ensures you don’t run into problems during the life of the loan and are always prepared for a temporary setback.
Know How The Lender Receives and Posts Payments
One aspect of the lending process that many consumers overlook has to do with how their payments are received and posted. Many lenders post payments the same day they receive them. Others will receive the payments and mark them as pending until they receive confirmation from the issuing bank. That may take several business days before the status changes from pending and the payment is applied to the balance.
If you know the lender who provides your truck finance does not apply the payment until it clears your bank, always allow extra time to remit your payment. Doing so will mean the payment is applied before you can incur any late charges.
Set a Personal Due Date That’s at Least a Week Before the Lender’s Due Date
Even if the lender applies the payments to your installment loans at once, always aim to remit your payments at least a full week before they are due. This approach provides you with some degree of flexibility if some unforseen financial emergency arises. In the best-case scenario, you end up being able to settle the emergency and still make your installment payment on time.
Consider Rounding Your Payments Up
You know that most lenders won’t accept partial payments. Perhaps you are not aware that many lenders are happy to accept payments that are a little more than the installment amount. By rounding up a few more dollars, you do lower the balance faster. That’s important if you are assessed interest based on the remaining amount you owe on the truck finance.
Make an Extra Installment Payment When You Can
Try to arrange your finances so you can make an additional payment from time to time. Perhaps you receive a bonus from work. Take part of it and make another car or house payment. Maybe you have the chance to make a little money with a side job. Place part of the wages into an interest bearing account and use the other part to make an extra car or mortgage payment. Being a few months ahead with installment loans is one more way you insulate yourself from financial issues if an emergency arises.
Be Aware of any Penalties for Paying Off the Loan Early
Many lenders do not impose any type of fees or penalties for retiring loans early. Even those that do have some terms and conditions that would mean you pay something for settling your truck finance early charge relatively low fees. Take a look at what it would cost you to pay off the loan before the settlement date. You may find that even with that additional fee, you save enough in interest charges to offset the penalty and still come out ahead.
The goal is to ensure that you manage your installment loan as responsibly as possible. Always be on the lookout for a way to get a little ahead and structure your payment schedule so that you have no trouble honoring every detail of the loan terms and conditions. Doing so will boost your credit score and make it all the easier to enjoy more competitive terms the next time you need some sort of financing.