5 Simple Ways to Master Personal Loan Repayment
In a world where the cost-of-living soars and unexpected expenses are a part of daily life, personal loans have emerged as a vital lifeline for many. Thanks to digitalization, obtaining these loans has become easier than ever. As of February 2023, outstanding personal loans have surged to over ₹40 lakh crore, marking 20.4% y-o-y, from the previous year’s ₹33 lakh crore, as per RBI data. Keeping this in mind, timely repayments will not only help in maintaining financial stability but also boost creditworthiness. The key to mastering personal loans lies in responsible usage and a misstep, like defaulting on EMIs, can swiftly plunge you into a debt trap. Therefore, mastering personal loans involves not just obtaining funds but strategically managing and repaying them, creating a path towards financial resilience and stability in an unpredictable world. Consider these five effective ways to repay your loan with ease.
- Prioritize Personal Loan Repayment
Taking charge of your finances starts with crafting a budget. Use it to analyze your monthly income and expenses by tracking your expenses. Commit to a monthly budget that covers all your needs and cut back on unnecessary spending. Before you jump into the personal loan world, make repayment your top priority. Sync your EMI payment date with your salary date, putting it at the forefront of your monthly financial commitments. Alternatively, create a dedicated fund solely for covering your EMIs, ensuring consistent and timely repayments without financial bumps.
- Opt for Debt Consolidation
Tired of juggling multiple loans and timely payments? Combine all your debts into one personal loan for a simpler repayment process and maybe even a lower interest rate with debt consolidation. It’s a cost-effective solution, especially. When you have various obligations, like personal loans, keeping up with monthly payments can be tough. Get a debt consolidation loan to merge all your bills, including credit card debt, into one. Enjoy the ease of a single monthly payment at a fixed interest rate, potentially lowering your overall interest costs.
- Consider another income source or sell ideal assets
To boost your income and tackle personal loan repayments, explore side businesses or monetize your interests. Renting out a property or discussing potential income sources can help you create additional funds for loan repayment, thus reducing your debt-to-income ratio. Another way is to sell the idle assets by liquidating investments like real estate, gold, or mutual funds can provide the necessary funds to pay off your loan and effectively manage your finances.
- Close the Personal Loan Early with Part-Payments
Accelerate your journey to debt freedom by making part-prepayments when possible. Beyond regular EMIs, channel extra funds toward the principal amount. This not only chips away at the principal but also reduces the accruing interest. If circumstances allow, consider foreclosing the personal loan entirely, albeit with potential foreclosure charges. While this approach demands financial discipline, the reward is a quicker and more affordable resolution.
- Take Personal Loans Responsibly
Above all, approach personal loans with a sense of responsibility. View them as tools to navigate temporary financial challenges, and only take them when armed with a clear repayment plan. Understanding the commitment involved and making informed decisions can transform personal loans from potential pitfalls into stepping stones toward financial stability.
While managing personal loans need not be a daunting task but one needs to be careful in planning, making strategic choices, and being responsible to navigate the repayment journey smoothly. Remember, financial freedom is achievable with the right mindset and a well-thought-out repayment strategy.
Authored by:- Mr. Amarjeet Tiwari, Head – Technology, SahiBnk, Powered by Manipal Business Solutions
(The views expressed in this article are by – Mr. Amarjeet Tiwari, Head – Technology, SahiBnk, Powered by Manipal Business Solutions. Technuter.com doesn’t own any responsibility for it.)
