Monday, March 1, 2021

The Importance Of Paying Your Bills and Loans On Time

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“Dream big, aim high and pay your bills on time.”
The bill is one thing that never runs out. It just keeps piling up especially if we are not financially responsible for it. On-time payments and repayments are a simple concept, but they are factors in building good credit so make sure you don’t pay late on your loans and bills.
This extraordinary situation has put almost every one of us in a bad financial shape and you may be tempted to put off your bills payments and loan repayments for a few days. Before you put them off, think first of  the consequences of doing so. You can rationalize a late fee, learn to live with a penalty rate increase, or choose to suffer the credit score damage, but those will make your life miserable and terrifying in the long run. It will affect not just your credit score but your life in general so think about the benefits of making your payment on time.

On-Time Payments and repayments means good credit score
credit score is a number between 300–850. Higher score means good credit history and the better a borrower looks to the lender. A credit score is based on credit history: number of open accounts, total levels of debt, payment and repayment history, and other factors. Make sure you have a good credit standing so the lender will approved the loan and sometimes at a lower interest rate. A delinquent account, may mean higher charges to the borrower.

Avoid penalties and Late Fees
You can be charged a late fee just minutes after your payment is due. Avoid expensive late fees by sending your payment on time. Don’t even wait for the due date to settle your payment because you might miss the payment cut off time.

Using a simple mortgage calculator can help you in your goal of paying on time. This free tool can be used to figure your monthly payments for a given loan amount and the result shows the accurate principal and interest payments on a fixed-rate loan.

The calculator is so easy to use. Just fill in the following Loan Information and click calculate button once done.

Home Price – The original amount of the house before down payment
Down Payment – When making down payments always make sure it’s at least 20% of the home price to avoid paying for insurances and other charges or fees.
Home Loan Amount – No need to fill in this portion as it is automatically calculated by deducting the down payment from the home price.
Annual interest rate – If you happen to forget about it, you can always check through your lender.
Loan Term – the length of your loan in years, where 30 years is the maximum.

You can actually use this to compute other loans such as car, student, credit card etc., to figure out your monthly payments and how much interest you accumulate over time. You will see from the result that if you maximize your loan term - which is 30 years – the total amount of your monthly payments after the duration of the loan is almost twice your loan amount and the interest you accumulated for 30 years is almost equal to the amount of loan. What more if you are always late on your loan or mortgage payments? Imagine how much interest your lender might add due to late payments, on top of the penalties and other charges.

Paying on time makes a lot of difference, not just being debt-free in the future but living risk-free every day. No matter how hard your financial situation may be, make sure to set aside a few wants and learn to prioritize your bills and loans. If you really can’t pay on time, talk to your lender as they might give you consideration like waiving the charges and penalties.

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