A loan is a great debt instrument. It provides the
necessary funds required during a cash crunch or a financial emergency.
Many banks offer personal
loans to those seeking finance to meet their personal goals and
obligations. The borrowed amount has to be repaid within a specific period of
time along with a certain interest. Failure to make payments on time results in
late payment charges. Besides, late payments may also affect your credit score
in a negative manner. The chances of getting approval on a loan thereby reduce.
You should, therefore, always repay on time
Following are five tips to repay your loans fast and
hassle-free:
1. Use an online calculator to estimate EMIs
Most financial institutions have a personal loan EMI
calculator on their
websites. Such a digitized tool helps you determine your EMI amount as well
your outstanding loan amount. This helps in having a clear understanding of
your debt and clear your loan in a hassle-free manner.
Since an EMI calculator takes various charges into
consideration, you may identify the total cost associated with your loan. .
2. Make a prepayment
Making an extra payment on your loan will help reduce
your outstanding amount to a great extent. This, in turn, lowers your EMI
amount. You may make a prepayment on your loan if you receive additional income
through any source such as sale of an asset, maturity of an investment or
bonus, besides others.
Some lenders levy a prepayment penalty on advanced
payments. So, check whether making the prepayment is profitable for you or not.
3. Opt for a smaller loan tenure
Loan tenure refers to the duration of repaying the loan.
Though many opt for an extended tenure as it helps them spread their debt over
a longer period, such an option involves a higher interest rate. In order to
clear your debt as soon as possible, opt for a smaller loan tenure. This will
result in lower interest payments, thus helping you save a significant amount
of money.
Remember that a shorter duration indicates higher EMIs.
You may, therefore, resort to such an option only if your financial position
allows you to do so.
4. Switch to a lender offering competitive
interest rates
Being stuck with a lender that charges high interest
rates will do no good to your finances. You will take a longer time to repay
your loan due to such high costs. Instead, consider making a switch to a bank
offering competitive interest rates. You may compare numerous banks and select
the one offering the most attractive rate of interest. While doing so, keep in
mind other loan-related aspects such as flexibility of repayment schemes,
eligibility criteria, and rate of approval, besides others.
Keep these tips in mind and clear off your debt as soon
as possible. By doing so, you will be able to march towards your financial
freedom.
Author: Preet K
No comments:
Post a Comment