How can you plan your Personal loan EMI Repayment

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How can you plan your Personal loan EMI Repayment

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As many lenders are currently available in the Indian market, taking a loan is emerging as a lucrative option for many Indians. Despite weak economic conditions, the demand for personal loans in India is soaring. And are on the up-rise as many people are trying to make a fortune in business thus lending a personal loan or other type of a loan.  According to the TransUnion credit trends report, the volume of loan origination has grown by around 134% annually. This indicates how popular these loans have become in our country. Being a borrower is one thing and being a smart borrower is another. Being a smart borrower means managing your Personal loan EMI without adding too much financial burden to your account.

Tips for planning the EMI repayment of your personal loan smartly

Below are five ways you can plan the repayment of your personal loan emi smartly:

1. Manage your expenses efficiently:

It is very important to manage your expenses efficiently for financial adequacy. Everyone must have a planned budget that permits savings no matter the role or stage in life. When you are on a loan repayment plan, you must reduce your phone bills, online subscriptions, dining out, fuel costs, and other discretionary expenses. You can pay the personal loan without hassles even by making small savings.

 

2. Grow your savings:

Being a wise planner means that you must not let your money sit idle in the bank. Invest the savings in your bank accounts appropriately and thoughtfully to earn interest and returns. Investing in mutual funds and fixed deposits is a great way to grow your money over time. You can use the interest earned or the money you save out of these investments to repay your personal loan emi.

 

3. Plan repayments in advance:

Many low-interest personal loans are available in the market these days, but merely a low-interest rate or a personal loan eligibility is not enough to ensure the timely repayment of your instalments. To ensure that you have sufficient funds and won’t default while paying the instalments, you must carefully plan your personal loan emi repayment structure. You can use a loan EMI calculator to calculate your personal loan emi. Lots of those can be found online.

 

4. Increase repayment rate with an increase in income:

A smart borrower tries to repay his personal loan as soon as possible. If you earn commissions or bonuses at your job from time to time or get excess monthly payments, the extra influx can be used to pay a part of the instalments before the scheduled time. However, you must first determine if they are any penalties or prepayment clauses that apply to your loan to avoid having to pay extra costs. 

 

5. Consolidate or refinance:

If you find yourself struggling to repay your loan, you can ask your bank for a restructuring of the loan. Some financial institutions happily offer a restructure to readjust the personal loan emi, interest rates, and repayment tenure on request. You can also opt to consolidate several smaller loans into one big loan to decrease the interest rate. Even if you still have a personal loan eligibility and decide to refinance your loan from a new lender, you can get the loan transferred to another lender whose interest rates are lower, and the terms are friendlier.

Conclusion

Missing out on your loan repayment can be a huge financial setback for you. It can eliminate your personal loan eligibility and decrease your chances of successfully securing a loan in the future. Apart from increasing your repayment burden for the next month, it also decreases your CIBIL score, which indicates your creditworthiness. Therefore, repayment must be your top priority after taking a loan. 

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