Save ₹2 Lakh on Your Personal Loan With These 5 Smart Strategies

Taking a Personal Loan can be the best financial solution to meet your financial needs, but paying extra interest isn’t. Many of us end up paying more than they should on the interest rate and other charges. In this blog, we’ll go into detail about the strategies that can help you save up to ₹2 lakhs or more on your Loan. So, let’s get started!

5 Strategies to Save ₹2 Lakh on Your Personal Loan

Here are the 5 clever tactics that can help you save more on your loan:

1. Compare Loan Offers Before You Apply

Before you select a lender for your loan, make sure you compare offers from multiple lenders, such as NBFCs, banks and other financial institutions. Even a small difference in the interest rate, let’s say 1%, can also result in saving you tens of thousands over the loan period.

Use online loan comparison tools to compare between lenders, and check the reviews on aggregate websites for more information.

2. Opt for a Shorter Repayment Tenure

Choosing a longer loan repayment tenure may get you lower EMIs, but it also means that you are paying more in total interest. Choosing a shorter loan tenure can help you save big on interest payments, even if your monthly EMIs are slightly higher.

For example, a ₹5 lakh loan at 13% interest for 5 years can cost you around ₹1.9 lakh in interest. So, when you opt for a shorter tenure, let’s say 3 years, your interest drops to ₹1.1 lakh, and you can save up to ₹80,000 right there.

3. Prepay Whenever Possible

If your lender offers you a part-payment or foreclosure facility, don’t miss it! Even a small lump-sum payment every few months can cut down the principal amount and shorten your loan tenure. 

For instance, you receive a bonus or a tax refund, use it towards your loan. This not only reduces your interest but also builds financial discipline. But this is only possible if your lender has no prepayment penalty policy, so ensure you check it beforehand.

4. Negotiate the Processing Fee and Charges

Many lenders charge a loan processing fee between 1% and 3% of the loan amount. So, when you take a loan of ₹5 lakh, you can negotiate somewhere between ₹5000 to ₹15,000.

Also, if you have a good credit score, steady income and no other liabilities, you can use it to negotiate with the lender.

5. Improve Your Credit Score Before Applying

Having a good credit score of 750 or higher can significantly boost your chances of getting a loan at a lower interest rate. If your credit score is lower than 750, take some time to build a good credit score and then apply for the loan.

Paying off your credit card dues, avoiding multiple loan applications and keeping your credit utilisation ratio below 30% can help you increase your credit score.

To Conclude

A Personal Loan can be your best financial decision if used wisely. By comparing different lenders, choosing a shorter tenure, prepaying the loan, negotiating fees and maintaining a good credit score can help you save up to ₹2 lakh over the loan tenure. By using these strategies, you can not only reduce your financial burden but also get good control over your debt.

However, you must remember that it is only about getting a loan; it’s about getting the best deal possible. So, choose the right lender, such as Poonawalla Fincorp and get the best out of your loan.

Frequently Asked Questions

Can I save ₹2 lakh on my Personal Loan?
Yes! By using smart strategies like comparing lenders, choosing shorter tenures, and prepaying, you can save a significant amount, sometimes even ₹2 lakh or more.

Is it better to take a loan from a bank or an NBFC?
It depends on you; NBFCs often offer more flexible terms, while banks may offer lower interest rates. Always compare offers before choosing.

What should I look for when comparing different lenders?
Look for interest rate, processing fee, prepayment terms, customer service, and hidden charges when comparing lenders.

Is a longer tenure always bad?
Not always, but it means you’ll pay more in total interest. Shorter tenures save you money in the long run.

Can I negotiate the loan processing fee?
Yes! If you have a strong financial profile, lenders may reduce or waive the processing fee.