Personal Loan Repayment Guide: The Best Ways to Tackle Debt

## Borrowing is Easy, Repayment Can Be Tricky When you need a little extra cash to see you through a challenge or to help you accomplish a big goal, most likely you’ll be able to access the funds fairly quickly once you identify the lender and [personal loan type](https://www.aviocredit.com/) that is right for your situation. When considering an installment loan or line of credit pausing and taking a moment to plan for loan repayment can prove extremely beneficial in the long run. Likewise, if you’ve already taken out a loan, spending time reviewing your situation and [making a plan](https://money.usnews.com/money/personal-finance/debt/articles/easy-ways-to-pay-off-debt)<a href="#six">^[6]</a> of action to [tackle those payments](https://www.aviocredit.com/faqs/repayment) will help ensure a smooth journey to the finish line. You’ll have your loan repaid in no time at all, and chances are you’ll create some excellent habits along the way that will help your financial health. Loan repayment for your installment loan or line of credit is just around the corner. Let’s devise a game plan. ## Build a Budget Ideally, you’ll want to build a budget before [borrowing funds](https://www.nerdwallet.com/article/loans/personal-loans/manage-personal-loan-payments)<a href="#one">^[1]</a> to cover emergencies or life’s inevitable little curveballs. Even if you didn’t budget before securing an installment loan or line of credit, a budget is always a good idea. One more time, let’s say it together: *a budget is always a good idea!* Fun? I didn’t say fun, but the more committed to budgeting you become, the better it feels. Trust me, I’m speaking from personal experience as someone who used to be highly allergic to the word budget. It can seem daunting, but building a solid budget and revisiting that budget on a monthly basis can create consistency that is vital to your financial health. Assess your monthly income and consider the non-negotiable items in your budget first: food, housing costs, transportation, clothing (basics here, I know there’s a sale at your favorite store, however you have goals, remember?), and medical costs. Perhaps not in that order. Next prioritize your debt and loan payments. Do you have multiple loans? If you’re building your budget prior to taking out a loan, make sure you can cover the loan repayment without having to compromise on any of your fixed and most important bills. A great place to start is choosing a budgeting technique that fits your lifestyle and your motivation. Budgeting can be hard. There are methods that promote extremely strict measures such as following a cash only plan and using envelopes to divvy up funds into categories. From personal experience, this is a fast track but somewhat painful way to get your spending in check. Other methods such as the [50/20/30 rule](https://www.forbes.com/advisor/banking/guide-to-50-30-20-budget/)<a href="#five">^[5]</a> could be a fit if your income is steady and you live in an area where cost of living is low enough to spend only 50% of your income on mandatory expenses leaving 20% for savings and debt and 30% of your income for things you choose. Budgeting within parameters set by financial experts doesn’t always feel reasonable, and it can be overwhelming, so start small. The first step is to assess your situation and then build from there. With a solid budget in place, loan repayment will become easier. ## Choose a Lender That Wants You to Win Choosing the right lender prior to taking out a personal loan is paramount to your success during the loan repayment process. A lender who has the best interest of their clients in mind when developing and servicing their loan products will want to help you succeed as you repay your loan. A lender who not only allows but encourages you to make extra payments to pay off loans early wants you to win. Avío Credit, for example, never charges a fee for [early repayment](https://www.aviocredit.com/faqs/repayment), and our team of loan experts encourages all Avío Credit clients to make extra payments, when possible, to save on interest. Sometimes life continues to hand us lemons. If you hit a rough patch while repaying your loan, a request for an extended due date or modification to your loan may be possible when you work with Avío Credit. No matter who you work with to apply for a personal loan, communication with your lender is important. Great lenders want to hear from you and to work with you to succeed from the moment you apply until your loan repayment is complete. ## Simplify Your Payments Making a payment on your loan should be easy. A reputable lender will make the process of loan repayment as easy as possible with options for automated or online loan payments, shifts in due dates when applicable, and open communication. Automated payments are a great way to ensure you stay on track and [make payments on time](https://www.businessinsider.com/the-pros-and-cons-of-setting-up-autopay-2013-1)<a href="#two">^[2]</a>, every time. When you set up an automatic payment for your loan, and add the payment to your monthly budget as a new non-negotiable, you’ll avoid falling behind which can prove costly in the long run. Set up your automatic payments immediately to take the guesswork out of the repayment of a personal loan. Perhaps you have your mortgage on auto-draft, where you can confirm the payment schedule dates. With automatic payments, it’s less likely that you’ll be late or rationalize the idea of putting off payment until later in the month regardless of any extra expenses you may encounter. Avoiding late payments, derogatory history on your credit report, and additional fees are important when pushing yourself to accomplish a big financial goal like paying off a personal loan. Once the loan is repaid, you’ll have extra funds each month to allocate towards tackling another debt or another goal. Or that sale at your favorite store you skipped when following a strict budget. Don’t abandon the budget altogether once your financial health is soaring, but everyone needs to enjoy the money they’re working hard to earn from time to time, right? ## Tackle Your Debt One Step at a Time One step at a time is the only way forward. When things have been rough financially or otherwise, little wins can help move you forward with confidence. The first step is to create that budget we talked about and focus on the goal of loan repayment. After assessing, planning for success, setting up auto-payments if that’s the best option for your situation, and taking a deep breath it’s time to tackle speeding up the process if you can. Making extra payments can speed up the process. During the budgeting step you may find items that you can cut from the monthly spending plan in order to free up extra funds that can be used for debt repayment. Perhaps you can pick up a side gig or sell a few items that are collecting dust in the garage. The quicker you repay your personal loan, the quicker you’ll have extra money to help you reach additional goals. No matter what you choose to do, the tiniest of steps towards making your payments go by more quickly will feel like massive wins. If you’re tackling more than one loan at a time, consider implementing the [debt snowball](https://www.nerdwallet.com/article/finance/what-is-a-debt-snowball)<a href="#three">^[3]</a> or [debt avalanche](https://www.nerdwallet.com/article/finance/what-is-a-debt-avalanche)<a href="#four">^[4]</a> methods. The debt snowball method advises that you pay off a smaller loan quickly by making budget cuts which will in turn free up extra funds that can be used to help pay off the next smallest debt. Like a snowball, as you collect funds from smaller debts to apply to larger ones, you gain speed and traction. The avalanche method suggests picking the loan with the highest interest rate and paying that off first to save in the long run by saving you interest. ## Keep Your Eyes on the Prize The bottom line is that putting an easy to navigate plan in place can motivate you to keep going. Small wins can likewise encourage you when the budget feels tight and the sales at your favorite store look almost irresistible. Debt can be overwhelming, but it is not an insurmountable feat. You can absolutely do this. Perhaps the hardest obstacle you’ll face when working on loan repayment is saying no to other things you want to buy, or sometimes even need to buy, while chipping away at current debt. If you’re repaying a loan, try to find creative alternatives to taking out additional debt when needs and wants arise. If a true emergency happens, Avío Credit has options that can help. Otherwise, keep your eyes on the prize. Being out of debt will feel great, and it’s worth a little extra sacrifice to keep going and reach that goal quickly. ### Sources: <div id="one">^[1] Millerbernd, Annie (2022, Jan 7). *How to Manage Your Personal Loan* Retrieved from: [https://www.nerdwallet.com/article/loans/personal-loans/manage-personal-loan-payments](https://www.nerdwallet.com/article/loans/personal-loans/manage-personal-loan-payments) <div id="two">^[2] Gregory, Jennifer (2013, Feb 18). *The Pros and Cons of Setting Up Automatic Bill Payments* Retrieved from: [https://www.businessinsider.com/the-pros-and-cons-of-setting-up-autopay-2013-1](https://www.businessinsider.com/the-pros-and-cons-of-setting-up-autopay-2013-1) <div id="three">^[3] O’Shea & Pyles (2021, Dec 16). *How to Use Debt Snowball to Pay Off Debt* Retrieved from: [https://www.nerdwallet.com/article/finance/what-is-a-debt-snowball](https://www.nerdwallet.com/article/finance/what-is-a-debt-snowball) <div id="four">^[4] O’Shea & Pyles (2021, April 23). *How to Use Debt Avalanche* Retrieved from: [https://www.nerdwallet.com/article/finance/what-is-a-debt-avalanche](https://www.nerdwallet.com/article/finance/what-is-a-debt-avalanche) <div id="five">^[5] Smith, Kelly Anne (2022, Mar 26). *Your Guide To The 50/30/20 Budgeting Rule* Retrieved from: [https://www.forbes.com/advisor/banking/guide-to-50-30-20-budget/](https://www.forbes.com/advisor/banking/guide-to-50-30-20-budget/) <div id="six">^[6] Kerr, Emma (2022, Feb 23). *14 Easy Ways to Pay Off Debt* Retrieved from: [https://money.usnews.com/money/personal-finance/debt/articles/easy-ways-to-pay-off-debt](https://money.usnews.com/money/personal-finance/debt/articles/easy-ways-to-pay-off-debt)