Online loans have made securing funds for various purposes like college fees, weddings, home renovation, etc., easier. But if you do not plan ahead, paying off the loan could be a daunting task. Before you are burdened by an increasing pile of debt, devise a strategy to repay the loan without stretching your monthly budget. This blog lists the 6 ways to pay off your loan quickly. But first, let’s understand why you must repay the loan faster. Scroll down!
Paying off loans faster has several advantages like:
Let’s have a look at the following tips that can help you with quick loan repayment:
You may have a single loan or multiple loans. However, it is important to first understand the loan repayment schedule and other terms of the loan carefully. Find out whether it is a long or short-term loan and the interest rate. You may want to clear loans with a shorter tenure and higher interest rates first.
For example, between a home loan and Personal Loan EMIs, you’re better off clearing your Personal Loan earlier. This way, you’re left with a fewer number of loans and don’t have to bear higher interest rates.
While you do need to reserve some amount of cash for emergencies, any excess savings can be used to pay off your loans. The money you save on interest can be invested in many lucrative options. However, you need to consider any prepayment penalty here.
Making extra payments can save you from paying a lot of interest payments. For example, if your company declares a bonus and you get a lump sum, consider making extra payments. You can also consider reducing the loan tenure by paying extra as your income rises. Paying off your loan earlier than the loan repayment schedule can help you save on interest and become debt-free quickly.
If you have multiple debts, keeping track of separate loan repayments can be a problem. The easier way is to combine these loans into a single loan and eliminate multiple loans in one go. This process is known as debt consolidation. Try the combination of a high loan amount, a lower interest rate, and a longer term. This may help you to enhance your credit score.
Whatever strategy you choose, you will need a spending plan. Saving money is difficult when you don’t know where to spend it. It is all too simple to get off track. With a spending plan, you can easily see where each penny is going, which will aid you in determining areas where you can reduce expenses and save money. The funds thus saved can go into your Personal Loan EMI or any other loan repayments you may have to make.
In case you have a credit card with an adequate limit, you can transfer the balance amount of your loan to it. This will eliminate the loan and transfer it as credit card debt. This can benefit you in several ways; one is you may get a better Personal Loan interest rate. However, you do need a good credit score for this.
You must consider the following things before pre-paying your debt:
Getting a loan online is easy if you have a good credit score and can furnish all the required documents. However, you must calculate your EMI before applying for a loan. You can also extend the tenure, use balance transfer, or consolidate your debt to pay off your loan quickly. Use the strategies mentioned here and be smart with your loan repayment so that you can live your life stress-free.
Yes, you can pre-pay your Personal Loan from Poonawalla Fincorp without any penalty (if paid from your own sources).
Pre-paying a loan can temporarily reduce your CIBIL score, but after a certain period, your score automatically increases.
Yes, pre-paying a loan can provide several advantages, such as saving your interest costs, removing debt burden, and improving your CIBIL score in the long term.
We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Personal Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply
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