How to pay off your loan? Get your questions answered!

How to pay off financing is one of the most frequently researched topics currently.

This is because this option was promoted as an alternative for those who want to avoid high interest rates.

But is it true? What is amortization? Is it really worth it? What types of amortization are available? How can I do it? 

All of this can be seen throughout the following content, which we have prepared with the main information about amortization.

So, if what you were missing was a detailed explanation about this option, just keep reading! 

What is amortization?

You've probably heard about amortization lately.

This is because, what is most talked about is that this is the real solution for those who want to escape from high interest rates.

But is this true? After all, what is amortization?

Amortization is a financial market resource that allows customers to pay off their debt in advance.

The advantage of this advance is that it is possible to advance the desired amount, interest-free.

This is because, during amortization, the amount is reduced directly from the outstanding balance, without considering the interest over the term.

This way, by paying off part of the debt, you pay off a portion of the outstanding balance, avoiding the interest that would otherwise accrue.

However, you need to be careful, as many people believe that with amortization, there is no need to pay monthly installments, and this is not true.

This is because, when you pay off a portion, the amount is not deducted from the current installments.

Therefore, it is necessary to continue paying the installments, so the amortization would be an extra payment.

Furthermore, it is important to note that when amortizing, it is possible to reduce the financing payment term, or the total amount, which reduces the installments. 

When you reduce the term, you pay off installments backwards.

When you reduce your payment, your installments become smaller.

But after knowing all this, how do you pay off your loan? Find out soon!

How to pay off financing?

In the previous topic, we were able to understand how amortization works, without using technical terms.

This is because we know that the internet is full of explanations on the subject, but they are not always so simple to understand.

Therefore, we focus on simplified content, so that you understand in practice what amortization is and what it is for.

This is because we believe that this is an alternative that has many benefits.

For this reason, the simpler it is to understand and practice, the better!

With this in mind, let's now look at practical explanations on how to repay financing.

As we mentioned, there are 2 types of amortization: by term and by total balance.

We will see how to perform the procedure in each case, as well as understanding when each of them is indicated.

How to repay financing by term 

The first alternative we will look at is the most popular among customers.

And this is because it has the potential to reduce a 30-year debt to 3 years, in very extreme cases.

This is because, in term amortization, the amount paid is discounted from the installments, from back to front.

Thus, let's assume that your installment is R$ 1,500.00, of which R$ 800.00 is interest.

Therefore, it is easy to understand that the amount deducted from your outstanding balance is only R$ 700.00.

Therefore, when amortizing over a period of time, without interest, using a value of R$ 2,100.00, you can pay off 3 installments.

When compared to the common payment, the same R$ 2,100.00 did not even pay off 1 and a half installments.

So, when you pay off your debt over a period of time, you reduce these installments from back to front, so that your debt has a shorter term.

Therefore, if before you had 230 installments to pay, with amortization you reduced these to 227, in a single payment.

Term amortization is worthwhile when done on a recurring basis.

This is because, considering our example, just think that 3 installments per month total 36 installments per year.

That's almost 10 years of installments in a single year!

How to do it:

To pay by term, you must access the Caixa Housing app.

When you enter the app, log in and locate your contract.

Now, go to the “Services” tab, and click on the “Amortize” option.

Enter the amount you intend to amortize, and then click on “Term”.

A simulation will then appear, showing how many installments you can pay with this amount.

If you agree, simply click on “View simulations” and choose the simulation presented.

Then, the invoice for the chosen amount will appear, so you can pay and settle the agreed amount.

It's that simple, and you'll have completed the process of paying off your financing over a period of time!

How to pay off financing by installment

The second option we have to pay off financing is through installments.

In this alternative, the amount paid is discounted from the total outstanding balance.

In this way, the installments to be paid are changed, through a decrease in value.

This reduction occurs because the final balance has changed, therefore, the value of the installment corresponding to the amortization also changes.

To understand better, let's go back to the example we gave in the other case.

Do you remember that of the R$ 1,500.00 of the installment, R$ 800.00 is interest and R$ 700.00 is debt amortization?

Therefore, in the case of amortization by installment, the discounted amount reduces the part related to the payment of the debt, minus the interest.

This way, the installment is smaller, which can be a great relief for those who are struggling with their monthly bills.

This alternative ends up not being the customers' favorite because it does not reduce the debt term.

This means you remain in debt for the same period.

Therefore, if you signed a contract for 360 installments, this number remains.

But, for those who have very high installments, which affect their monthly budget, and have no problem with the term, it can be worth it.

It's all a matter of perspective and priorities, because in any case, paying off your debt helps reduce interest! 

We will now see how to pay off financing by installments.

How to do it: 

Amortization by installment is as simple as the other method, as it is carried out by Habitação Caixa.

So, the first step is to download the app, log in, and locate your contract.

Once this is done, go to the “Services” tab and click on the “Amortize” option.

Now, choose the desired amount, and click on the installment option.

Then, the simulation will appear, showing the new value of your installments.

Simply select the simulation and complete the payment by installment, and your payment will be finalized! 

So, if you had any doubts about how to pay off your loan in installments, now you know it's very simple!

Amortization of financing with FGTS 

Did you know that it's possible to pay off your loan without taking a single cent from your monthly budget? 

This is done through the your FGTS balance, which can be used for amortization.

To do this, simply access the Habitação Caixa app, and go to the “Services” tab and then the “FGTS” option.

Remember that to use the FGTS for the first time, you must request authorization at a Caixa branch.

If this is your first time, the agent at the branch will help you complete the repayment.

From the second time onwards, it is possible to do the procedure through the app, in a much simpler way.

Simply authorize the use of FGTS and deduct the desired amount from your contract.

And, just like that, you discovered how to pay off your loan using 3 methods! 

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