How to Repay your Personal Loan Fast and Hassle-Free

Thursday, October 19, 2017

How to Repay your Personal Loan Fast and Hassle-Free

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

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