How to Repay Your Consumer Durable Loan Faster and Save Money

Repaying your Consumer Durable Loan faster involves smart financial planning, systematic savings, and choosing the best repayment option without risking debt or defaulting. Quick repayments are always an ideal scenario since the quicker you repay the loan, the more you save on interest. This blog explores how to repay your Consumer Durable Loan faster, helping you save more money in the long run. Let’s get started!

5 Tips to Repay Your Consumer Durable Loan Faster
 

Repaying your loan sooner starts with understanding your loan structure and exploring strategies that suit your needs. Keep the following tips in mind when planning how to repay your loan.

1. Make a Repayment Schedule

Understanding your loan terms and planning your repayments should be your first step once the loan is approved. Your contract will specify the loan amount, EMI, interest rate, and the entire repayment period. 

Every EMI constitutes payment of a portion of your principal and a portion of the interest; while the former must be paid off in full, you save on the latter when you repay your Consumer Durable Loan early.

Also Read: Key Things to Know Before You Apply for a Consumer Durable Loan

2. Choose Shorter Repayment Tenure

This step involves some pre-planning since you’ll be choosing your tenure at the checkout counter or point of sale. Short repayment periods have higher EMIs, but the interest amount payable is comparatively lower. This, in turn, can help you close your loan early. 

Moreover, the higher EMI can also lead to responsible financial behaviour, helping you further improve your credit score. On the other hand, choosing a shorter tenure means you have sufficient funds each month to cover the higher EMI amount.

3. Foreclose the Loan

If your budget allows, look at paying off the entire loan ahead of schedule. Early loan closure provides peace of mind, frees your monthly budget from the EMI obligation, and can also boost your credit history. But if saving money is the goal, you need to know exactly what your prepayment terms and conditions are.

Also Read: 6 Benefits of a Consumer Durable Loan You Probably Didn’t Know

4. Speed Up Repayment by Paying Extra (Part-Prepayments)

Regularly paying a little over your base EMI helps you pay off your loan more quickly and reduces your interest load in the long run. It’s also the best option when you can’t gather enough funds for complete foreclosure but are earning well enough to pay a bit more each month.

Your additional payment goes directly to the principal, reducing the interest accrued over the balance tenure. Naturally, part-prepayments should be your first choice if you get a bonus, tax refund, or other windfall. However, keep in mind that this may mean forgoing some investment opportunities or indulgent spending.

5. Manage Your Finances to Support Faster Repayment

Careful budgeting can help you find extra money to pay off your loan sooner. Track your monthly spending and look for areas where you can reduce costs. Here are some practical steps to take that can free up funds:
•    Cut unnecessary want-based expenses.
•    Bonuses or financial gifts should go straight to your loan account.
•    Consolidate all your debt into a single loan repayment to make fund management easier and benefit from potentially lower interest rates.
•    Embrace small savings, from swapping expensive private cabs for public transport to eating out a little less.

Also Read: Consumer Durable Loan Vs Small Personal Loan

To Conclude

Repaying a Consumer Durable Loan can help you save more money, provided you plan it well. Ensure you thoroughly understand your loan terms and repayment capacity to manage your cash flow. With the right approach, you’ll pay off your Consumer Durable Loan in no time.

Poonawalla Fincorp offers a Consumer Durable Loan with flexible tenures of up to 24 months. Apply today!

FAQs

How can extra payments help me repay my loan faster?
Any additional payment reduces the loan directly. A lower principal means less total interest, allowing you to close your loan earlier than planned.

What online options are available for paying EMIs?
Most lenders accept EMI payments through net banking, UPI, cards, and digital wallets. These options are fast, secure, and available at any time.

Are there penalties for paying off my loan early?
Many lenders charge a fee for prepayment or foreclosure. Check your loan terms and compare these fees with possible interest savings.

What if I miss an EMI?
If you miss an EMI, you are likely to face penalties. Your credit score could also be affected, so it's essential to pay the overdue amount as quickly as possible.

Does early loan repayment improve my credit score?
Yes, closing your loan on time or ahead of schedule often improves your credit profile. Lenders report early closures positively to credit bureaus.

Is it possible to foreclose the entire loan in one go?
You can foreclose your loan if your lender allows it. Check for a foreclosure statement and any charges before proceeding with full repayment.