Loans are a great solution for those seeking finance during a cash crunch. Many individuals avail of a loan for various purposes, like meeting further education needs, funding a wedding, splurging on an international holiday, besides others. Even though such loans are a great help during emergencies, a very important factor to keep in mind is to repay the borrowed amount on time.
You may borrow a loan for a longer or shorter tenure, based on your financial position. It is recommended to repay the loan quickly as it removes the burden of debt. Additionally, the rate of interest is lower if the loan is repaid within a short time.
Following are five tips that will help you repay your personal loan quickly.
- Stick to your budget
Quite often, individuals end up borrowing an amount that exceeds their ability to repay. You must avoid such a mistake. Borrowing more than you are able to afford exerts financial strain in the long run. Therefore, it is important to stick to your budget. This will help you make timely repayments and pay off the debt as quickly as possible.
- Use the installment calculator
Most lenders have an Equated Monthly Installment (EMI) calculator on their online portal. This calculator helps identify the EMI amount and the loan tenure you may opt for. Based on your repayment capability you may, therefore, gauge the tenure you are comfortable with, thus helping you clear your debt conveniently.
- Check for fees and charges
Lenders levy numerous fees and charges to service the loan. It is necessary to check for such charges, like processing fee, interest rates, and foreclosure charges before applying for a personal loan. Another important fee to consider is the prepayment charge. In case you make an advanced payment towards your loan, due to a surge in income, the lender levies an additional charge. In order to reduce the loan amount and repay faster, opt for a lender who offers competitive and lower fees.
- Choose the right lender
Conduct a thorough research on various banks and Non-Banking Financial Companies (NBFCs). Opt for a lender that is well-established in the lending market. Such lenders are highly knowledgeable about the latest trends and offer a competitive rate to potential loan seekers. You may, therefore, choose a lender that offers the best possible deal, thus lowering the overall amount to be repaid.
- Increase payments with a hike in income
A simple way to pay your EMIs quickly is to increase the installment amount with a corresponding rise in your income. Many lenders offer a step-up plan, wherein you may increase your EMI amount with a hike in your income. This helps reduce the outstanding loan amount and repay the loan quickly.
Quick repayments help reduce your financial burden. Moreover, you must make EMI payments on time. Paying after the due date attracts late fees and may also have a negative impact on your credit score. You may, therefore, use the aforementioned tips to repay your personal loan early and enjoy peace of mind in the long run.