Save Money and Secure Future with Interest Saving Loans
You would always want to put your money towards some important things like groceries or paying your electric bill, etc. instead of paying a high-interest rate on loans. A high-interest loan makes it difficult to save money for a secure future. But as the saying goes where there’s a will there’s a way. So, if you're looking for ways to save money and secure future with interest-saving loans, then you are at the right place as here we have provided some ways to save money on loans. So, keep on reading and know how you can save your money for a secure future.
Three ways can be used to save money and those are:
Let’s have a quick look at each of them to have a clear understanding.
A balance transfer is a process that involves a customer transferring his/her outstanding loan amount from one lender to another one (offering a lower interest rate on the outstanding loan amount). A balance transfer process does not require any security to be provided to the lender. However, this process may involve certain foreclosure charges that are levied by the current lender.
Let’s take an example to know how a balance transfer helps in saving money:
Suppose, you have a personal loan for Rs. 2, 50,000 for repayment tenure of 3 years at a 20% p.a. rate of interest , and your monthly EMI comes to Rs. 9,291. The total interest you would pay for the period of your loan will amount to Rs. 84,472. If after 1 year you opt for a balance transfer and the interest rate is now reduced to 14%, the principal outstanding on your loan is Rs. 1, 76,299. If the balance transfer of the outstanding amount is rounded off to Rs. 1, 80,000, the monthly EMIs will drop to Rs. 8,642 while the total payable interest will go down to Rs. 27,416. For the first year, you would have paid back Rs. 44,039 which meant another Rs. 40,433 was remaining. But with a Personal loan balance transfer, you will have to pay an interest of at Rs. 27,416, that means a saving of around Rs. 13,000.
Here are few other benefits of Balance Transfer
Top Up Loans
A top-up loan is an option that provides you with the opportunity to apply for additional loan amount top-up amount in your already existing loan amount. As the need for extra funds can arise at any time. Those who already have a loan and always repay on time can opt for this option. Not only this, but it also helps in saving money on loan, let’s understand it with an example.
Let’s take an example to know how a Top Loan can help in saving money:
Suppose your bank has approved a personal loan of Rs.25 lakhs for 5 years at an interest rate of 11% and now you need extra funds and your bank is offering top-up loans at 9.60%. Then you think about it yourself which will help you in saving money going for a fresh loan coming at 11% or top loan at 9.60%.
Benefits of Top Up Loans
- Reduces Interest Burden: You can choose to avail of a top-up loan on the existing loans and use it to pay off high-interest debts like credit card dues. This can help you to reduce the debt burden and save money.
- Minimal Documentation: Generally, in the case of most lenders, no additional documentation is needed to apply for a top-up loan. This is primarily because you have an existing relationship with the lender and the lender also knows about your credit and loan repayment history. However, this documentation process differs from one lender to another.
- Longer Tenure: If you opt for a top-up loan, the term depends on the outstanding balance, your repayment capacity as well as the loan amount you are getting. The loan term can be longer than that of the outstanding loan amount, which is why many people prefer a top-up loan.
- Fast Processing: Since you and the lender have an existing relationship, the lender processes the application for a top-up loan faster than an original loan. The disbursement of the loan amount is faster as well.
Low Interest Personal Loan
A personal loan is a collateral-free loan offered by the banks or NBFCs to meet personal needs. It can be used to meet any financial purposes like to meet unexpected expenses or any other requirements, they can also help you save money. Yes. If you used it properly, a personal loan can help you save money in several ways. Some of them are given below.
Benefits of Personal Loan
- Lower rate of interest: You must know that interest rates charged on personal loans are lower than those charged on most of the other types of unsecured credit like a credit card. Therefore, a personal loan can be used to make purchases in place of credit cards as a money-saving strategy.
- Consolidation of debts: You can acquire a large, low-interest personal loan to pay off your other high-interest debts. By consolidating multiple debts with higher interest rates into a single debt with a low-interest personal loan, you can save a lot of money and effort as well.
- Claiming tax benefits: If you use a personal loan for home renovating purpose or making a down payment for it, then you may get tax benefits. However, to enjoy this benefit, you will have to produce the proper receipts and documents before the loan-issuing bank.
- Smart repayment plans to increase savings: Before applying for a personal loan, you can choose the most appropriate repayment plan, as per your current and foreseeable financial status, offered by some lenders to enhance your savings.
Ways to gets a personal loan at a low-interest rate
- Improve Credit Score: As mentioned above, it is crucial to maintain a good credit score of 750 or above as it reflects your creditworthiness. The simplest way to improve the credit score is to keep paying the EMIs of the existing loans and credit cards on time and keep checking the credit report for any defaults.
- Pay Existing Debts: Before applying for a personal loan, it is always advisable to pay all the existing debts to narrow down the DTI ratio. This will ultimately help you to get a low rate of interest.
- Compare the available offers: Don’t go with the first personal loan offer you get or see. Compare interest rates charged by multiple lenders to get the best deal.
These are some ways that can help you to save money and secure the future. However, which one is the best is completely based on your requirements as each has its own benefits. We hope that this blog has helped you with what you were looking for.