Smart tips to repay your personal loan on time
January 26, 2022
Paying a personal loan on time can help you keep your finances in check and help you build your creditworthiness. Keep reading to know some smart ways to make loan repayment a tad bit easier?
With the skyrocketing cost of living and unplanned expenses becoming a way of life, personal loans have become a crucial life saviour for many. Getting personal loans no longer requires waiting in a queue for hours. Digitalization has made access to loans way easier. You can now get personal loans online with ICICI Bank.
While getting such fast access to loans is favourable, it is important to take such loans responsibly. If taken with caution and with a clear plan to repay on time, personal loans can help you wade through the financial crisis while also helping you build your creditworthiness. On the other hand, if you default on your EMIs, personal loans can quickly land you in a debt trap.
Hence, it is important to have a clear plan to repay the loan on time. Let’s look at 4 tips that can help.
1. Prioritize Personal Loan Repayment
Before you even apply for a personal loan, you need to make loan repayment a priority. Ensure that the payment for your EMI is close to your salary date. It will help you to pay your EMI first before all other expenses. Else, try creating a separate reserve to ensure sufficient funds are always available for paying the EMIs.
2. Opt for Debt Consolidation
If you have multiple loans and paying EMIs on time is a struggle, debt consolidation can be the best option for you. For instance, if you have a high balance on your credit cards, you can opt for a single personal loan to consolidate your debt. Moreover, the personal loan interest rate is usually lesser than the interest charged on your credit card.
It reduces the cost of debt and helps in managing the process of loan repayment. Overall, it is a cost-effective way of repaying personal loans.
3. Personal Loan Balance Transfer
A personal loan balance transfer is feasible if you have a personal loan with a high interest rate and high EMIs. Opting for a personal loan balance transfer allows you to transfer your loans at a lower interest rate. Besides this, you can also increase your loan tenure, which can reduce your EMI considerably. This can make it fairly easier for your to repay your loan. On the flip side, if you can afford it, opt for a shorter tenure while going for a balance transfer which ensures your loan gets over quickly.
4. Close the Personal Loan Early
Try making part-prepayments for personal loan repayment if you have sufficient funds. Apart from paying the EMIs, if you pay part-prepayments, this goes towards the principal amount of your loan. Consequently, the principal reduces. And so does the interest amount. Opting for foreclosing the personal loan not only clears the loan in a shorter period but also makes it affordable over time. Moreover, you may have to pay foreclosure charges in case of repaying earlier than scheduled tenure.
Take Personal Loan Responsibly
A personal loan is a tool that can help you avert a temporary financial crunch. However, it is important that you take such loans responsibly and only if you have a clear plan in place to repay the loan.