How to Get Rid of Your Personal Loan in 2024: 7 Smart Ways to Pay It Off

7 Smart Strategies for Tackling Personal Loan Debt

Personal loans provide fast access to lump sums of cash for major expenses, debt consolidation, and more. But the ease of obtaining funds means it’s also easy to accumulate personal loan debt that becomes difficult to manage.


The average personal loan amount is around $16,000 and comes with interest rates ranging from 6% to 36% APR, depending on your credit. With high rates and lengthy 3-7 year terms, it’s crucial to pay off personal loans as efficiently as possible to avoid accruing excessive interest charges.

Implement these 7 savvy strategies to take control of your personal loan debt:

1. Create and Follow a Realistic Budget

The foundation of any strong debt repayment plan is understanding your complete financial picture through thorough budgeting.

Track Your Income

Document your net monthly take-home pay after taxes and 401k contributions. Be sure to include all sources of income like your salary, freelance work, investment returns, etc.

Categorize Expenses

Track every dollar spent over 1-2 months using a spreadsheet or budgeting app. Label expenses as essentials like housing, groceries, utilities, transportation and discretionary like dining out, entertainment, hobbies.

Allocate Funds Wisely

With your average monthly income and expenses visible, plan a budget that directs money where it matters most:

  • 50-60% to essentials
  • 20-30% to discretionary spending
  • 10-15% to savings goals
  • 10-15% to debt repayment

Tweak percentages based on your priorities. The key is consciously directing funds rather than vague spending.

Monitor and Adjust

Check your actual spending against the budget frequently and make adjustments to get on track. Unexpected expenses will happen, so build in a buffer.

Committing to daily or weekly budget tracking brings awareness and accountability to make smart spending decisions that align with your financial goals.

2. Make Personal Loan Debt a Repayment Priority

Personal loans tend to charge higher interest rates than options like mortgages, auto loans, and student loans. Rates can vary widely from 6% to 36% APR depending on your credit score and lender.

With rates potentially in double digits, it’s critical to prioritize repaying personal loans aggressively to avoid accruing substantial interest charges over months and years.

After budgeting for essential needs and modest savings, funnel all extra available cash toward making payments above the monthly minimum due on your highest interest personal loan.

As you pay off loans, continue rolling those monthly amounts into the next highest interest debt until everything is repaid. Maintaining this disciplined focus minimizes wasted money on interest payments.

3. Refinance at a Lower Interest Rate

An effective way to speed up repayment and save money is refinancing your existing personal loan to a lower interest rate. This reduces your monthly payments and total interest paid over the loan term.

Refinancing makes the most sense when you can decrease your rate by at least 2-3% below your current level. This provides meaningful interest savings that outweigh the costs and fees of obtaining a new loan.

You’ll need a good or excellent credit score in the 670+ range and steady income to qualify for the best refinance rates. Compare offers from multiple online lenders like LendingClub, Lightstream, and SoFi to find competitive interest rates.

Run the numbers to see if refinancing adds up for your situation, and lock in the savings if so.

4. Boost Your Income to Accelerate Repayment

Beyond just reallocating existing funds in your budget, consider ways to actively increase income through a second job, freelancing, or monetizing a hobby.

Even an extra $200-500 per month from a side hustle makes a major dent in personal loan balances when focused entirely on debt repayment.

Some options to earn supplementary income include:

  • Driving for a rideshare service like Uber or Lyft
  • Delivery services like Instacart or DoorDash
  • Tutoring or music lessons in your area of expertise
  • Freelance writing, design, or consulting in your field
  • Flipping and reselling items from thrift stores
  • Renting out a room or property on a short-term basis

The key is choosing an enjoyable side gig that provides flexibility around your regular job and maximizes hourly earnings.

While it may require sacrifices of your limited free time temporarily, view it as an investment in your future freedom from loan debt.

5. Cut Non-Essential Expenses

In combination with increasing earnings, look for opportunities to trim discretionary spending and reach your payoff goals faster.

Evaluate recurring expenses that may provide convenience but little real value:

  • Subscription services you don’t use often
  • Frequent takeout meals or expensive coffee shops
  • Unnecessary in-app purchases or digital subscriptions
  • Premium cable packages and streaming services

Temporarily reducing dining out, entertainment, shopping trips, and leisure travel can really move the needle on debt repayment.

Channel those savings toward extra principal payments so you reach a zero balance sooner.

6. Consolidate Multiple Debts

If you have outstanding balances across several credit cards, installment loans, or retail accounts, consolidating everything into one new personal loan can streamline repayment.

Debt consolidation makes the most sense when you can qualify for a much lower interest rate than your current debts. This reduces the total interest paid over time.

Typical strategies include:

  • Balance transfer credit cards with 0% intro APR
  • Personal loans or lines of credit through online lenders or credit unions
  • Non-profit credit counseling agency debt management plans

Run the numbers carefully and consider consolidation costs before pursuing this route. While consolidation can provide a fresh start, don’t view it as permission to rack up new debts.

7. Negotiate Directly with Your Lender

If refinancing or consolidation isn’t feasible, another option is negotiating directly with your current lender for improved loan terms.

You can request:

  • Lower interest rate to reduce monthly payments
  • Extended loan length to create more manageable payments
  • Adjusted payment due date to align with your pay schedule
  • Waived late fees if you’ve missed payments

To increase likelihood of approval, pull together documentation showing good faith efforts to repay such as enrollment in autopay, proof of income, and budgeting steps taken. Politely explain how proposed changes will prevent default.

If you’ve consistently made on-time payments, the lender has incentive to retain you as a customer rather than forcing collection.

Additional Tips and Resources

  • Automate payments to avoid late fees – set up autopay through your lender
  • Watch out for balance transfer scams with hidden costs – read terms closely
  • Consider loan counseling services for free debt advice – National Foundation for Credit Counseling
  • Communicate with lenders early if struggling – call right away if risk of default
  • Consolidate multiple loans through reputable lenders like LendingClub, Lightstream, SoFi
  • Boost your credit – pay all bills on time, lower credit utilization. Higher scores qualify for lower loan rates

Managing personal loan debt takes strategy, discipline, and perseverance. But staying focused on the end goal of becoming debt-free is incredibly empowering and liberating. You can do it!


Personal loans provide easy access to financing but can become burdensome if not repaid efficiently. Implement budgeting, increased earnings, reduced spending, and debt consolidation to focus on repayment. Refinancing, negotiating with lenders, and credit counseling provide additional options to ease the path. Use a combination of strategies tailored to your situation to eliminate personal loan debt as fast as possible. The financial freedom you gain is well worth the diligence required along the journey.


Should I use my 401k to repay personal loan debt?

This is usually not advisable, as you’ll face penalties, taxes, and lose retirement savings growth. Only consider this as an absolute last resort if facing dire financial circumstances.

Where can I get help managing overwhelming personal loan debt?

Reputable non-profit credit counseling agencies like NFCC provide free debt and budget counseling advice. They can help navigate loan consolidation, lender negotiation, and debt management options.

What payoff strategies work best for high-interest personal loans?

The debt avalanche method is optimal – make minimum payments on all debts except the highest interest personal loan. Funnel all extra money toward repaying that loan first before moving to next highest rate.

How much should I budget for personal loan repayment each month?

Aim to put at least 10-15% of your net take-home pay toward personal debt repayment. Any windfalls like bonuses or tax refunds can also be applied.

Is it better to refinance with my current lender or a new lender?

Compare interest rate offers from both your current lender and other lenders. Go with whoever provides the lowest rate for your situation, as the lender itself doesn’t matter.


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