With a plethora of lenders available in the market today, borrowing money has become a viable and lucrative option. In India, the demand for a personal loan is soaring despite weak economic conditions. As per the credit trends report from TransUnion, personal loans’ volume of origination has grown 134% on a year-on-year basis. This speaks of the popularity of such loans in our country. However, it is one thing to be a borrower and another to be a smart borrower. Smart borrowers manage their personal loan EMI without adding much financial pressure.
Here are five ways to plan personal loan EMI repayments smartly:
Manage your expenses
The importance of efficient cost management for financial adequacy cannot be stressed upon enough. No matter the stage or role in life, everyone must have a budget planned and manage expenses to permit savings. Cut down discretionary expenses such as online subscriptions, phone bills, fuel costs, dining out, etc. Even a small yet increasing savings rate can help to pay the personal loan EMIs without any hassles.
Grow your savings
Wise planners never let their money sit idle. If you have substantial savings in your accounts, invest them appropriately to earn interest and returns. You can choose fixed deposits or mutual funds to allow your money to grow over time. The excess money or interest earned can be used to repay a personal loan.
Plan repayments in advance
There are many low interest personal loans available in the market. However, merely low interest would not suffice to ensure a timely repayment. You must plan your EMI structure carefully to ensure that you have sufficient funds and do not default paying the instalments. For calculating the EMI, you can use a loan EMI calculator available online.
Increase repayments with an increase in income
The main goal of a wise borrower should be to repay the personal loan as quickly as possible. If your job is such where you earn bonuses and commissions or get monthly over-payments, you can use the extra influx to pay a part of the loan before schedule. However, it is important to know of any prepayment clauses or penalties applicable to your loan to avoid extra costs.
Consolidate or refinance
In case you are struggling to repay a loan, you can ask the lender for restructuring. Some institutions are happy to readjust interest rates, EMIs, and tenures as per your repayment capability. Moreover, you can opt to consolidate several smaller loans into one big loan to enjoy lower interest. In other cases, you can choose to refinance your loan from a new lender. This is possible by transferring the loan to another lender that charges less interest and offers friendlier terms.
As a borrower, missing out on EMI payments can cause a huge financial setback. Not only does it increase the burden for the following month, but also lowers your CIBIL score. Hence, loan repayment should always be a priority. You can check the personal loan eligibility of Tata Capital and be assured of best-in-class services, consumer-friendly policies, and affordable interest rates.