Personal Loan Prepayment
Personal Loans are a great tool which can help you to manage your personal finances. And many of us must be having this loan. However, getting approved for a personal loan is not a big deal, the eligibility criteria are minimal and there are a large number of lenders offering a personal loan.
Since you have a personal loan, the next thing which you should be worried about is repaying that amount. A personal loan comes at a higher interest rate making the repayment a little tough as compared to the other loans. The tenure period of the personal loan is also low, putting more financial pressure on the borrower.
Therefore, planning the prepayment strategy for your personal loan is the first step towards avoiding any mistake of mishandling a loan and avoiding a debt hole for you.
Steps to Pay off Your Personal Loan Quickly
Choose the Loan Amount According to your Requirement:
Before you apply for a personal loan, you should check for the exact amount you need. Taking a loan for an amount more than you need can put in trouble as you need to pay high interest for it.
Opt for an EMI which You can Pay Comfortably:
Nowadays, lenders have EMI calculator on their website using which you can calculate the approximate EMI towards your personal loan. Just you need to provide the loan amount and the tenure for which you want the loan. Knowing the EMI even before loan approval helps you to plan your finances accordingly. Moreover, if the EMI amount is not affordable for you, then select an EMI amount that you are comfortable with, and for which you don’t need to interfere with your monthly budget and savings.
Make a Budget & Plan for every Expense:
Making a budget will help you to plan for each and every expense and resulting in managing your finances in a better way. This way you can pre-plan for the repayment of your personal.
Don’t default with any of the EMI:
Defaulting even for a single EMI can reduce your CIBIL Score, which can affect your future creditworthiness. Hence, try not to default for your EMI towards your loan. With many lenders, you can also be charged late payment penalties or penalties against defaults. This will further add to your finances making it tough for you to repay and increasing your financial burden.
Track & Monitor your Expenses:
Taking a personal loan needs a strong financial commitment, as you need to pay a higher EMI to wads it. Some may even need to make a few lifestyle changes to ensure that they have sufficient EMI to pay for their personal loan EMI. Tracking your expenses can help you in a situation where you are getting short of money every month. Tracking expenses will let you know exactly where your money is going, maintaining an excel sheet for your expense will you do so. try to cut down on unwanted and not so necessary expenses.
Avoid getting into new Debt:
If you already have a personal try to avoid getting into a new debt such as applying for a credit card or taking another personal loan. Just don’t do this! Doing this will provide you funds that time but will end up with paying EMIs for the next few years. It will never be a good idea to pile on more debt.
Try to find the Second Source of Income:
There are lots of options to create the second source of income, you can do freelancing or do any creative work in which you are good. All this can go side by side of your main job and will add funds to your pocket.
The funds coming from the second source of income can be totally used to pay EMIs, in this you will not be hampering your monthly budget and have not to compromise on anything to save for your EMI.
Create a Prepayment Plan & Save for It
Creating a prepayment plan for your personal loan is very important. Having a plan helps you to work according to it and keeps you motivated. You can plan the way you are comfortable and according to your finances. But, don’t get overburdened but try to save more so that you can prepay your personal loan.
Working out according to the above-mentioned points will definitely help you to plan your personal loan repayment in a better way. It’s true that personal loans are meant to help you manage your finances but even a single EMI default towards it is not at all good for your financial life. Plan well for your personal loan repayment and enjoy a happy financial life.