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Repayment Of Personal Loan
Understanding how to smartly repay your current loan can not only save you precious time, it will also allow you to save a greater portion of your hard-earned money. By analyzing your financial situation, you can select from a variety of routes to repay your loans. This will lower your debt obligations, improve your credit score and enable you to build your financial stability in a meaningful way
Here’s how to repay your existing loans or debts with ease.
1. Repay loans with your savings
If you are considering repaying your outstanding loan, your savings account is the first source that you would be looking at. You may also use your savings to foreclose the loan, but to do so you would need to have a large amount of savings. A reasonable way to start debt clearing is to concentrate on the lowest interest loan.
2. Debt consolidation
This is another clever way to keep your ongoing debt in order. If you have multiple loans, interest rates will pile up and become expensive and time-consuming.
Controlling. You can consolidate all of your debt into a single loan to streamline the repayment and ...
... make it more affordable. For example, with the Loan Against Assets, you can use up to Rs.5 Crore loan.
You can make the most of high loan size, a low-interest rate, and a long tenor if you opt for a secured loan. This approach provides you with the funds you need and lets you combine all of your loans into one monthly payment while keeping costs down. You can also use the Flexi Loan program that you can borrow and repay when and when you want. Since you just need to pay interest on what you use, it is cost-effective.
3. Reduce the tenor when possible
If you have a long tenor loan, each time your income increases you can reduce the tenor. This means you can every the tenor by a few months when you get your annual assessment. It will slightly boost your EMI but decrease the total interest the loan will pay. Check the personal loan EMI calculator to calculate your EMI value. Thus, you will be able to repay the loan gradually but steadily in a cost-effective manner.
4. Making extra payments to clear the loan early
Another thing you can do is make part of your loan prepayments, apart from paying the usual EMIs. This payment goes to your lending principal. As the principal amount decreases, so too will the interest amount be lower. This will not only make your loan more affordable as time passes, but it will also enable you to repay your loan in a shorter time frame. But, ensure that your loan doesn’t come with hefty prepayment charges or penalties to be able to make the most of this option.
You will have a set amount of time to repay your personal loan — usually 12, 24, 36, 48, or 60 months. Longer repayment terms will lower your monthly loan payments but you will also pay more in interest than you would if you had a shorter repayment period. Your interest rate may also be tied to the term of repayment. Shorter periods of repayment typically lead to lower interest rates.
Having an open loan can affect your ability to obtain approval for other loans or credit cards in order to limit future credit options for longer repayment periods. Many personal loans also have penalties to pay off the debt early, so it's best to take the shortest possible repayment period.
Top lenders offering low personal loan interest rates are:
ICICI Bank personal loan
Fullerton India personal loan
Bajaj Finance personal loan
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