• O'rise Finance

Loan Tricks That the banks don't want to know about!

This might seem like a simple and insignificant thing, But take it from me the most overlooked things affect our daily lives the most.


The Reason banks hide this from us is because it takes money away from them and banks don't like that. banks are in the business of making money ninety-nine percent of the time and the other one percent is to keep the client happy, In other words, profit first then the customer second.


Ok, too much babbling here is what to do.


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  1. Change your loans to Bi-weekly payments

Most banks make your repayments monthly. This makes a whole year 12 months' worth of payments. If you switch to the bi-weekly payment you’ll essentially be paying the same amount each month EXCEPT you will be making an extra payment each year.


With 52 weeks in the year, you will then make 26 payments per year. There are 12 months in a year and if you paid your payment twice a month that would make your payment 24 times.


So… with bi-weekly payments, you are making what you pay two more times by just changing to bi-weekly, instead of just paying twice of the month.


This may appear as nothing major. HOWEVER, this has 3 main reasons to benefit your financial health.


  • It helps you chunk up your loan payments. This means it isn’t as difficult to pay on the 1st of the month when all other bills/rent is due and you may be tempted into taking a payday loan.


  • You’ll pay off your loan sooner


  • You’ll save on interest!


Here’s a real-life example I use as a reference.


Say you have a $20,000 unsecured loan at 14% with monthly payments of $374.80 over 7 years. This totals $31,483.22


  • 1) If you were to switch over to bi-weekly payments which come out to $187.40, you have the potential to save 11 months of repayments and only pay $29,832.26


That’s whopping save of $1650.96!


  • 2) Refinance your loan to a lower rate

It is possible to refinance your car or home loan and become complacent, paying the minimum monthly payments and work hard until you pay it off.

But, if your credit wasn’t deemed ‘poor’ when you got the loan or if the market wasn’t prime for borrowers when you received the loan (2008 for example) then you probably aren’t getting the best possible deal. Simply call your bank and ask to refinance at a lower rate. If for some reason they decline to help, it's time to shop the market and take your custom elsewhere. You can feel confident that another bank will want to offer you a better deal.


  • 3) Transfer your loan to a balance transfer credit card

Another idea is to transfer the loan debt you have already to a balance transfer credit card. Recall, the example from earlier. $20,000 loan at a 14% interest rate. Imagine transferring this over to a 0% introductory balance transfer credit card for 15 months. This would equal savings of thousands in interest! Some balance transfer credit cards are at 0% for up to 24 months!


Always remember, after the 0% 12-month introductory time span is over, it will go on their regular interest rate on the 13th month. Just ensure you have the self-discipline to know exactly when the rate will go up.


  • 4) Round your direct payments up

A smart way to ensure you are always on time for your payments is by setting up direct debits from your bank account. It's also a great way to force yourself to make extra payments. Imagine, an extra $5, $20 or $100 can go a long way. From the same example made earlier ($20,000 loan at 14% interest rate over 7 years) making an extra contribution of $50, you’ll save over $2000 in interest.


The best way to avoid payday loan traps is to educate yourself on positive financial practices and improve your credit score. Contact one of our expert advisers today at O’rise Finance to escape the trap of payday loans and make the first step towards a great financial future.




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