Personal loans are more important today than ever before. You can easily avail a personal loan to satisfy your long-term or short-term fiscal demands. Personal loans will help you fulfill your dreams, such as vacations and destination weddings.
Once you receive the loan, it is important to repay it as planned. This is important to meet your financial goals.
Tips to Manage Personal Loan EMI
Here are a few tips to help you handle your personal loan equated monthly installment (EMI) payments smoothly.
1. Make a monthly plan
Start by making lifestyle changes to ensure that your monthly income can cover your loan EMIs. If you are married, you can sit down with your partner and prepare a list of your monthly salaries and expenditures.
You can decide which costs can be reduced. You can also explore options for additional revenues if required. After reducing your expenses, you can keep aside enough money to pay off your personal loan EMI.
2. Set up recurring payment alert
You may inadvertently skip the EMIs owing to your busy schedule. To prevent this, you can create an alert and pay the EMI 2–3 days before the due date.
An even better choice is to set up recurring personal loan EMI payments from your bank account. As a result, the funds will be regularly deducted from your bank account on the set date without any input from you.
3. Restructure or consolidate your loans
Check the amount and terms of your loan when seeking one. If you find it hard to pay your EMIs, discuss it with your bank. You can ask for options to alter the terms of the loan or extend the duration of the loan.
Another option is to merge your old debts into one personal loan. This will prevent you from having to recall various EMI deadlines. It will also prevent large debts.
4. Assess the following options for loan prepayment
You don’t have to be burdened with EMIs until the end of the loan term. You can look at options for prepayment when possible. A gift or a raise at work may leave you with additional money that can be used for the prepayment of the loan.
You can find out the fines for prepayment, if any. Another option is to talk to your bank about raising your monthly personal loan EMI. This will allow you to pay off your loans faster and lower the total interest rate.
5. Prepayment of the loan
You may have picked the longest loan term based on your ability to repay. This will keep your EMIs low. You can also use personal loan EMI calculators online. After you have paid the EMI for 6 months, you may prepay the debt in whole or in part with no extra fees.
Even a partial prepayment may greatly reduce your EMI. Any future income inflow, such as a bonus or pay rise, can be used to lower the loan amount. This will help you handle the debt wisely and stress-free.
6. Make a reserve fund
As soon as you start earning, create a reserve fund to see you through a rainy day. It is important to be prepared for unplanned events and emergencies. As a rule, refrain from spending all your money.
Whatever changes in your life, your personal loan EMI payments will stay. They will be due every month. As a result, it is important to save every month while you can. This reserve fund will see you through the bad times.
7. Keep a good credit record
The importance of a high credit score cannot be overstated. Reneging or delaying EMIs has a negative impact on the credit record and reduces the chances of getting a loan when you need it.
Hence, it is essential to handle your personal loans carefully and repay them regularly. You can calculate your personal loan EMIs using personal loan EMI calculators online.
8. Raise the EMI amount if possible
Many NBFCs provide flexible payment terms that you can use when required. If you get a pay raise or additional money, you can use the extra money to pay off your loans rapidly. Ask your bank to increase your EMI so that you can pay off the loan faster and become debt-free.
On the other hand, if you face any issues with your EMIs, you can ask the bank to increase the number of EMIs to make it easier for you to pay.
9. Pay off high-interest loans first
Make a list of your debts based on their interest rates. A home or personal loan will likely offer lower interest rates and tax savings. In addition, the value of a home may rise with time.
Credit card loans and personal loans often have slightly higher interest rates. It is a great idea to pay these first before going on to the easier ones.
10. Make a distinct fund for EMIs
Set up a distinct fund for personal loan EMIs. This will enable prompt payments even during difficult times. You can create another savings account for this. This account should only be used to make EMI payments.
Ensure that this account has enough money to handle your loan and payments easily and efficiently.
Unsecured private loans are a good choice to fill a short-term fiscal gap or deal with an unplanned need or situation. You must be more diligent and engaged in your monthly budget plan.
You should also strive to close the debt as soon as possible. Ensure that your personal loan EMIs are paid on time. Late payments may result in late fees and, worse, can harm your credit score, making it harder to get a loan in the future.
Visit Piramal Finance for more information about how you can pay your EMIs with ease. You can also learn how to get a personal line of credit. Learn how to manage your finances with Piramal Finance.