It is important for any borrower to track the status of their loans in order to fully understand what it is that you have outstanding on any loans that you have and how you can reduce those amounts over time. Tracking your loans is an essential part of making wise financial decisions and can significantly impact your wealth both in the short and long term.
To start with you should spend some time to read through any loan agreements that you have entered into and document the terms. If you are not financially savvy or experienced in financial matters then you will have to spend some time learning and researching what the key definitions in your loan agreements mean. Hone in on the important loan terms such as the loan interest rate, the life of the loan and repayment amounts and periods, and any prepayment penalties that may be present on these loans. Also consider if there are any personal guarantees that you have made on these loans and if there is any sort of property lien by the lender. Finally be sure to document the type of loan that you have as there are significant differences between a mortgage loan, credit card debt, and a student loan just to give a few examples. All of these factors are worth documenting as it can be compared to other loans that you can trade your current loan in for through a debt refinancing.
Once you have this basic documentation available on your loan you will be able to compare your loan to other loans that are available on the market to see if the market offers better loan terms if you qualify with your credit history and score. While there are loan costs that can limit your ability and the desire to refinance your debt, it should be an option that is considered by many people.
That way you can track your loan to the current market and see if it is beneficial for you to pursue another loan to replace the loan that you currently have. Another tool that is useful in assessing and tracking your loan is a loan amortization table that lets you enter in the basic data that you gathered on your loan and understand how the amount will be repaid over time.
Each loan repayment consists of both interest and principal and as you make repayments on your loan the amounts that are allocated to principal and interest will vary over time. An amortization table will help you to understand the loan payments that you make so that you can decide whether or not you want to prepay your loan or devote excess funds that you have to other financial needs that you may have.
These tools come in quite helpful and you can run various different results by keeping different versions of your loan amortization schedule so you can see both your current loan payments as well as the total payments that you will need to make over the life of the personal loan with and without prepayments which can significantly alter your decision making process.