Students juggle too many liabilities like rent, utilities, credit card recharges, car repairs, etc. After graduation, children find it hard to cope with every expense of living distant from family. It is the reason they seek additional cash flexibility in the form of young people loans. It helps them fix a thing without waiting for someone to pay for it.
However, they find it challenging to make payments later. The reasons for the same can be anything like- urgent and unplanned medical expenses, car breaks, short-circuits or any sudden expense. Thus, one can easily tap and qualify for loans for young people having the required income to provide as proof. It is for individuals aged 17-21 needing extra cash support. The ease of accessibility makes it one of the most popular choices among students.
However, the only condition that may hamper the financial progress of a student is – missing repayments. Taking up a loan is easy, but ensuring timely repayments is more important. If you miss a payment, your credit score drops by 10 points. It is the most dangerous of all. Eventually, you may not qualify for higher limits on credit cards, get affordable loan terms or even get a mortgage.
Thus, having a disciplined approach to payments is critical. If you are confused and struggle to arrange a comfortable payment schedule, the blog may help. It lists the best ways to pay off a debt without hampering your finances and credit score.
6 Ways to Clear Debt as a Student Easily
The primary thing you must analyse is- where your most money goes. A simple way to do that is by analysing your credit cards and recent bank statements. It would help you know about the spending pattern. Moreover, you can re-analyse the budget and curtail it thereafter. There are many other ways to pay off debt faster. Let’s analyse:
1) Analyse the total amount
It is one of the best ways to begin with debt management. Unless you know the total amount you must have, you cannot clear the debt. Thus, analyse your credit report and the payments in the profile. Calculate the total amount by considering the interest costs and the late payment charges accordingly.
2) Analyse your savings
Yes, savings make next to the list. Once you know the number you must pay as debt to the lender, analyse how much you already have. Figure out the savings in dividends, part-time income, windfall cash, regular income, etc. Calculate the total amount you have. Subtract the important expenses like utilities from it. The amount you get is what you can dedicate towards the repayments.
3) Stop using credit cards for a while
When you are neck-deep in debt, using credit cards can dilute your finances further. Well, yes, you may instinctually grab one for almost every purchase. Refrain from using it until you pay the debt. Credit cards are high-interest liabilities that restrict you from achieving financial freedom or leading a debt-free life.
Thus, limit the usage and seek other ways to meet your needs. For example, use cash instead of credit cards. If you are not used to it, check fair credit score loans for your immediate needs. It is more economical than credit cards and helps your credit score. You may qualify with a stable credit profile and income. You can use these loans for almost any purpose and get it the same day.
No, this would not add to the debt if you choose the right and comfortable payment terms. However, avoid using these out of habit. Otherwise, it would not help your credit score. The facility is essentially for urgent or emergency purposes. Moreover, big-ticket purchases can wait until debt payments.
4) Seek ways to increase income
Next, you must analyse the ways to increase the savings. The best way to do so is by increasing both passive and active income modes. Check favourable part-time job opportunities and analyse the grants and benefits you may qualify for.
It can help you cover up the debt payments quickly. There exist many grants by the government for unique individual circumstances. Check whether you qualify for any schemes and grants. If yes, apply for it. You may ensure some relief on the savings and debt clearance part using these benefits.
Apart from that, seek a promotion within the existing position or an income hike. If you have been working sincerely within the same organisation for long, you may get one. The employer may consider your contribution and increase your pay substantially.
As a student, you can earn even from your home. Multiple platforms provide the opportunity to earn from home. It implies- the job may not collide with your university or class schedule. Moreover, it will only help you clear debt quickly.
5) Check for pre-payment penalty
Once you increase your repayment capability through different income modes, identify the pre-payment penalty. It is one of the major obstacles to credit scores. Paying without knowing the pre-payment charges hampers the finances and credit history.
Sometimes, the damage takes a long time to recover. Alternatively, if the lender allows you to pre-pay the amount, you must do it. It must not impact your budget’s bottom line. Do so only if you share sufficient cash flexibility to meet critical life requirements. Once you do so, your debt will fall, and your credit score will increase. It may be helpful from a financial point of view.
6) Analyse whether you can increase the loan term
It is the last resort when none of the tips work. If you cannot increase your income or need time, increase the loan term. It would buy you more time to reflect on your finances, improve them and clear debt. Discuss the possibilities of extending the loan repayment term to 6 months or more according to your finances.
He may help you with that. However, increasing the loan term implies more interest payments and costs. If you already share student loan debt, it would not be ideal. Instead, explore the best direct lenders in the UK marketplace to bridge the payment amount. It would help you clear the loan without extending the agreement unnecessarily.
Loans for young people are an exceptional way to counter your everyday needs. However, you must plan the repayments before the payment date. It would help you save and budget right. Moreover, you can avoid additional charges like- penalties. Alternatively, if you are stuck on repayments and find it hard to deal with, the above-mentioned tips may help.
Leo Allende is a Senior Content Editor at Myfinancialloans. He is dedicated to give his readers the well-researched and fact oriented blogs with the in-depth study of the UK loan marketplace. He has won many prestigious awards in his long 13 years of experience while working with many reputed financial firms.
Leo Allende became the passionate of UK finance and loan market after joining Myfinancialloans where he parts in decision-making body. Leo has done Doctorate in Finance.