Taking out a Personal Loan is an intelligent way to cover urgent expenses or finance big-ticket purchases. Still, having a solid repayment plan is essential to pay off the loan cost-effectively and timely. Although paying off a 10 Lakh Personal Loan is overwhelming, discover these steps to pay it off successfully and improve financial standing.
1. Creating a Budget
Creating a budget is the first important step in developing a solid repayment strategy. Even before applying for a loan, one must closely examine their spending habits and estimate the remaining disposable income after setting the loan EMIs. The first step is to track monthly expenses and keep costs in check to achieve financial goals. Accordingly, borrowers can set an amount aside for the loan repayment each month. This trick helps an individual stay on top of their finances and become debt-free faster.
2. Setting Up Direct Debit
Setting up direct payment of loan EMIs from the bank account is a smart way to ensure timely loan repayments. Activating the e-mandate means the EMI amount will automatically debit from the borrower’s account and reach the creditor’s account on the due date each month. It reduces the risk of missing EMI payments, which eventually hurts the credit score and decreases personal loan eligibility in the future.
3. Read the Fine Prints
Sometimes, borrowers make prepayments to become debt-free faster. However, many do not know that lenders might charge prepayment fees for paying off the loan before the loan term-end. These charges are usually stated in the fine print of the loan agreement.
Before signing a loan agreement or prepaying the loan, read these fine prints carefully and understand the advantages and disadvantages of prepayment. If the lender charges a prepayment fee, ensure that the money saved with prepayment is worth the payable prepayment charges. Otherwise, invest the extra money elsewhere to grow it and make its best use.
4. Use a Personal Loan EMI Calculator
The personal Loan EMI calculator is an online tool that helps choose the right loan tenure and plan debt repayment effectively. It helps calculate the EMI amount payable each month, including the interest outgo, loan tenure, principal amount, and total payable amount. These details are crucial in making an informed borrowing decision according to the loan seeker’s monthly repayment capacity.
An EMI calculator gives a clear idea of the loan’s impact on the borrower’s monthly budget and helps them decide if they can afford timely EMI payments. The information is especially significant for people with limited budgets and tight finances. Taking another debt without knowing the consequences may worsen their condition and bring them into a never-ending debt circle.
Another advantage of using an EMI calculator is that it helps compare various loan offers available in the market. By entering their loan amount, interest rate, and repayment tenure, applicants can see how much they need to pay each month to pay off the loan. Comparing different loan offers helps find the best loan plan suitable to their needs.
5. Consider Loan Refinancing
A borrower who took out a 10 Lakh Personal Loan a few months ago may get better deals now due to an improved credit score, hike in salary, or another reason. Such circumstances make them eligible for better loan offers with better terms and lower interest rates than the current loan plan. Since Personal Loans have shorter repayment periods of 12 to 48 months, keeping an eye on the latest loan schemes and qualifying for a better deal is no harm. Refinancing the Personal Loan with a new loan provider can save money on the interest outgo and reduce the overall loan cost.
6. Make Lifestyle Changes
Little lifestyle changes can go a long way in keeping the finances in order. They help accommodate EMI payments conveniently into the monthly budget and ensure timely payments without stressing the finances. Lifestyle change often means cutting down on unwanted expenses and luxuries, going slow on dine-outs and movie shows, and leaving credit cards at home when going to a shopping mall.
These tips and strategies are the keys to educating borrowers on various repayment techniques they can use. They can choose one that best suits their financial situation and make the repayment smooth and successful without any financial stress. Before applying, applicants can use Personal Loan EMI Calculator available on the websites of top NBFCs like Clix Capital for free to calculate their EMIs and plan their repayment accordingly.
About the Author
Amaira Sharma is finance expert and former business growth strategist who has more than 8+ years experience in the industry, now she helps others to get better financial stability and standards. She loves to write useful tips on personal finance and businesses.
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