23 Jun 2021 | 6 min read
Savings are insufficient for many people to realize their aspirations or cover unexpected needs. This is when people turn to personal loans to meet their financial obligations. You name it, and many NBFCs, Banks, aggregators (Afinoz) have a personal loan for it, whether it's for buying a used car, paying for a vacation or schooling, or covering wedding or home improvement costs. These are unsecured, no-collateral loans that are widely offered. The application process is straightforward, and you might receive loan approval in a short period. The issue arises, though, when it comes to repaying the loan EMIs.
Below are a few helpful hints for making personal loan repayment more manageable:
1. TAKE OUT A LOAN IN THE AMOUNT THAT YOU REQUIRE.
NBFCs provide a large number of loans to help borrowers meet their financial obligations. However, you must first examine your circumstances and then ask for a loan amount that is appropriate. For example, Afinoz provides personal loans of up to 25 lakhs, but you must not apply for the maximum loan amount available. Calculate your expenses and apply for a loan that is large enough to cover them.
2. SELECT AN AFFORDABLE EMIs
Personal loan payments can be made more reasonable with the help of a budget. Get a sense of how much money you have available each month and choose a loan term with manageable EMIs. To calculate the EMI amount for a specific loan tenure, you can use a personal loan EMI calculator. Your EMIs should ideally not absorb more than 30-40% of your monthly income. If you choose greater EMIs than you can afford, you risk postponing or skipping payments, lowering your credit score, and negatively impacting your repayment history.
3. CHOOSE DEBT CONSOLIDATION
If you're paying EMIs for numerous little and large loans at once, it's likely that you're having trouble remembering each loan's due date, and you may be missing payments from time to time. Taking out a personal loan to consolidate debt can be a good alternative in this circumstance. You accept one loan to pay off all of your old debts, and you only have to pay EMIs on the new loan you took last. The major benefit is that you won't have to deal with multiple lenders, and your attention will be solely on one loan. As a result, you're able to better manage your payments.
4. MODIFY YOUR LIFESTYLE
Making some lifestyle adjustments may assist you in reducing some expenses and improving your financial health, allowing you to better manage your EMIs. When you save more money, you can pay more in monthly installments and pay off your personal loan faster. Reduce outings to the movies, cook at home, prevent impulse purchases, and purchase fewer clothes. These are some of the additional expenses you can cut for the time being in order to make your personal loan payments more affordable.
5. Make your payments on time.
It's bad enough to have to pay several EMIs. Do not include late payment costs. Furthermore, this has an impact on your credit history. As a result, it's a good habit to pay your bills on time.
6. Have you gotten a pay raise? Increase your EMIs.
Increase your Equated monthly installments (EMIs) whenever you obtain a raise at work. The more you increase your EMIs, the sooner you can pay off your obligations - and the less interest you'll have to pay.
7. Have you received a bonus? Make a deposit.
When you get an unexpected bonus or investment return, it's tempting to indulge in a lifestyle buy. But if you’re under a mound of debt, it would be more realistic to dig your way out of it first. Any windfall should ideally go towards debt repayment. Prepayment is permitted on several loans, including Home Loans, with no penalty. Learn more about whether or not you should pay off your loans early.
To conclude, loans are significant financial commitments that should only be undertaken if you are satisfied that you will be able to manage them alongside your other expenses. With a little forethought, you can do both: enjoy life while staying within your means to avoid being pursued by creditors. A disciplined lifestyle will assist you in repaying your debts and allowing you to live debt-free.