The desire to be debt-free and stress-free might be a challenge for many. Being debt-free is a financial goal for most individuals who have debts to repay. And to do so, those drowning in debt must turn to different personal loan repayment methods, such as cutting down on essential lifestyle costs. Is this the only method to handle debt?
No, not always. There are many ways to handle debt, so one does not have to make many financial compromises. Here are some easy strategies to pay off debts faster.
Papers Needed to Apply for a Personal Loan Pre-closure
In the event of a personal loan pre-closure, a lender and a borrower must exchange a few papers. People should make sure they have all this paperwork as evidence that they have returned the debt.
Papers required by the lender:
- KYC documentation
- All loan documents
- Bank records showing all EMI payouts made to date
- Statement of Prepayment
Papers to be obtained from the lender:
- Pre-closing payments received
- An NOC (No Objection Certificate) is needed to end the instant personal loan
- Certificate of personal loan closure
- Certificate of payment due
Tips To Repay Personal Loans Faster
There are multiple methods to handle debt, so people don’t have to make too many fiscal choices. Here are some easy ways to apply for personal loan repayment quickly.
- Consolidation of Debts
Paying many debts at once might be hard to manage. Combine all of the debts into a single payment to avoid falling behind. For example, Shankar has a personal loan, a vehicle loan and past-due payments. Combining them into a single loan and paying the loan sum each month at a single set rate would help him. A personal loan to consolidate debts will result in cheaper costs.
- Consider the Amount Owed
Begin by reviewing all debts, including credit card balances and house loans. Note each item, including the amount owing, the rate, and the needed minimum payment. Knowing how much a person owes can help them pick the best debt-reduction approach for the case.
- Examine the Income
The other method for paying off a loan quicker is checking the income. Make a budget for monthly income and spending, and decide how they will contribute to debt repayment. Don’t depend exclusively on credit cards in the budget.
Many online personal finance tools and calculators are available to assist in creating a monthly budget. People may also discover many ways to boost debt payments and cut down on unneeded spending.
- Payment via Savings
First, focus on the finances by reviewing the credit card balances, outstanding payments, and obligations. People may schedule their debt needs by factoring in their monthly savings and expenses. Reduce any needless spending and keep the funds above a certain level. People may use many apps to keep track of their monthly costs. A few of these apps could even assist them in better managing their money so they do not keep slipping into debt.
- Round Up the Amount for Loan Payment
One more method for repaying an instant personal loan quicker is to add up the total payment if you have room in your budget. Rounding up the loan payment is the most simple and effective way to pay off debt faster.
After a few months, the extra payment will become normal, and the extra funds will be progressively deducted from the principal amount. Assume Shankar has a monthly payment of Rs. 22500.27 and rounds it up to a fair Rs. 25,000. That extra payment he makes each month is subtracted from the principal and might save him a lot of money in the long run.
- Use the Variable Salary to Pay Off a Portion of the Debt
If people get variable compensation in the form of rewards and bonuses, they may also use that money to pay down a portion of the personal loan. Such payments are generally proportional in quantity and may help them slowly lower the loan burden.
- Examine & Pay Off Debts
Before making any fund choice, people must assess what they currently have and how they will make it work. The same is valid for debt repayment. Make a list of all the obligations and decide which are lengthy and which are short-term ones.
An instant personal loan, for example, might be seen as a short-term commitment, but a house loan can be viewed as a long-term commitment. As a result, it makes sense to pay off the debt first. One more way to look at it is to first pay off loans with higher rates.
- Reduced Debt Tenure
The ideal time to reduce the debt is soon after a rise in income. If it’s a bonus, use the money wisely to return a lump sum, if feasible, to reduce the overall term. A shorter stay, even if by only a few months, might provide welcome relief.
Select the tenure smartly. Avoid selecting a lengthy tenure that will cost more money or a short tenure that will put people under a lot of pressure.
- Loan Transfer to a Bank with a Lower Rate
A loan transfer is a good option to keep in mind. If one locates a lender with a cheaper rate than the present lender, they can move their credit to that bank. This may allow them to reduce the total amount owed faster. It is vital to study and do proper research before selecting a lender to ensure that this choice is sensible.
Choose and act properly to relieve oneself of the outstanding balance and high rates.
People may use the ways above to pay off their personal loans quicker than they now know how. Paying off an instant personal loan within the specified time frame improves the credit score and boosts loan eligibility the next time they need one.
Check the pre-payment terms, and hurry to pay off the loan. This ensures that users will be free of debt as soon as possible.
Visit Piramal Finance to learn more about how to apply for a personal loan and explore the different products and services.
Also Read: Common Myths About Personal Loans