5 Ways to Manage Your Personal Loan EMI Payments
A personal loan can be your financial savior when you need cash urgently. A personal is an unsecured loan. You are not required to give any assets as security. The loan may also be used for any purpose, such as paying medical costs, remodeling your home, or funding a big event. Its application form requires very little paperwork.
While it is fairly simple for most people to get a loan, paying the EMI can be a chore. Most people are so busy with their daily lives that planning to pay back a personal loan becomes the least of their concerns. This is not a sound financial tactic.
Any late personal loan EMI payments might impact your next financial plan. This can also ruin your budget. To avoid this, read the tips listed in this blog to manage your personal loan EMI payments better.
What Exactly is a Personal Loan?
Before getting directly into tips for managing personal loan EMI payments, let us see what a personal loan exactly is. Personal loans are unsecured loans offered by banks based on job history, ability to repay, income level, and credit history. These loans, also known as consumer loans, are multi-purpose loans. They may be used to cover any of your urgent requirements.
Unlike a credit or debit card, a personal loan offers users a one-time cash payment. Borrowers then pay back the loan amount plus the interest rate in regular monthly payments (EMIs) during the loan’s term.
Due to the advent of online lenders, dozens of quick and simple loan choices are available. It mostly takes less than 10 to 15 minutes to apply online. However, the approval process might take up to one business week, depending on how quickly the lender receives and processes your papers.
Other costs, such as an origination or admin charge, may apply to these loans. Once approved, this is taken from your loan balance or as an early payback penalty if you pay off the loan before the end of the term.
Perks of Obtaining a Personal Loan
- Other loans, such as a home loan or a gold loan, need more paperwork. But personal loans require just a few. The approval procedure is rapid.
- With several money firms or banks providing online services for loans, funds are disbursed within a few hours. This is the case if the lender is confident in your payback ability.
- Another perk of personal loans is that lenders allow you to pick your loan tenure. These loans often have terms ranging from one to five years. You can also choose the loan period based on your ability to repay. You should choose a shorter loan term to save money on interest and repay the debt quicker.
Tips for Managing Personal Loan EMI Payments
Here are some tips to follow to manage personal loan EMI payments:
- Never miss an EMI
Never missing an EMI is one of the best tips to follow to manage personal loan EMI payments.
You must pay your EMIs on time. If you pay by cheque, try to deposit it on a certain day each month. Make a note of it on your phone. If cash is taken directly from your bank account, ensure that your account has a sufficient balance so that the EMI is deducted on time.
A strong credit score might help you get credit lines at a lower interest rate. A low-interest rate means a lower monthly EMI. Personal loan defaults or missed payments may result in fines.
- Boost your expense planning
If you currently have debts and ask for a personal loan, first figure out how much you will be paying as EMIs for all of your loans. These expenses should not exceed 50% of your gross pay. After paying all EMIs, you must have enough left over from your wage to cover your daily needs and other monthly personal costs. This tip for managing personal loan EMI payments will work as a savior for you.
- Use a personal loan EMI calculator
The role of an EMI calculator could be overstated. The loan amount is often established by expected spending or demands, and the lender sets the rate. But the loan’s duration is an element you have complete control over. Changing the loan’s duration might affect the monthly EMI. If you have a low income and expenses to meet, you are better off selecting a longer tenure. This will lower your monthly expenses without hurting your wallet or limiting your lifestyle.
- Make a contingency fund
As soon as you begin earning money, you should start putting money away for a rainy day or sudden events. As a general rule, you should only spend some of your earnings. Take the example of a family crisis, a health issue, or a sudden job layoff. You will need finances to tide you over while you look for your next job. Yet, the personal loan EMI payments will continue. They will be due each month. As a result, it’s critical to save money every month that you can in order to get through difficult times.
- Prepay your loan
You may choose the longest loan term available at the time of application based on your payback abilities. This will help keep your EMIs low. After you’ve made personal loan EMI payments for six months, you may prepay the amount in whole or in part with no extra fees. Even a partial prepayment may greatly reduce the EMI. Any future financial inflow, such as a bonus or salary increase, may be used to pay off the loan. This will ensure that you handle the debt carefully and with less stress.
Unsecured personal loans can help you get through a relatively brief cash crunch or encounter unexpected financial needs. But use this as a chance to control spending and concentrate on your monthly savings plan.
Additionally, you should take proactive steps to close the personal loan as soon as possible. With these simple tips, you are sure to manage your finances well. Your personal loan EMI payments will not be a burden anymore.
You can read relevant blogs on Piramal Finance and grow your personal finance knowledge. They also offer a wide range of products and services for you to benefit from.
Also Read: How Much Personal Loan Can I Get in India?
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