Many a person lengthens the payment period on a loan in order to lower the monthly payment amounts. Say you cannot afford to make $600 a month in loan payments. The lender gladly lowers your monthly payments to $400 a month because he has increased your amortization period by several months. What this means is that the total cost of your loan is higher because you will be paying more interest due to the increased number of months you will require to pay back your loan.
If you want to know how much money you could save by shortening your loan payment period, all you need to do is search for any amortization calculator on the internet. In my case, I found that I could save $6,000 on my $29,000 debt if I increased my monthly payments from $380 to $680 and reduced my loan period from 100 months to 50 months.
Play around with the calculator until you find a payment amount and payment period that suits your lifestyle. Then calculate how much less interest you will be paying to your creditor and contribute that amount instead into an interest-earning account so that at the end of paying off your loan you will be rewarded with a nice chunk of money!
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