Today, getting a quick personal loan is easier than ever, with a simple online application to most lenders. However, planning your repayment is essential for a smooth borrowing experience. When you repay your personal loan on time, you not only avoid penal interest charges but also boost your credit score, thereby managing your overall finances better.
While a personal loan has higher interest charges applicable to it since it is a collateral-free loan, being smart about spending and planning repayment in advance can help you repay your personal loan in a timely manner and manage your funds efficiently
Read on to know more about how you can repay your personal loan quickly and conveniently.
👉Plan For Repayment Before You Apply
Prior planning holds the key to success and one way to service personal loan EMIs is to fall back on your regular income. You can also utilize earnings from investments and thereby repay your loan without feeling any financial stress. Irrespective of the source you rely on, you can plan for repayment accurately by using a personal loan calculator. This online tool provides you with the exact amount you need to pay every month by factoring in the loan amount, tenor, and rate of interest.
Generally, financial advisors recommend that your debt-to-income ratio, which indicates how much of your monthly income goes into servicing various forms of debt, should not be more than 50%. Some lenders, in an effort to lend prudently, require this to be 40% or less. When planning how to repay your personal loan, it’s important that you budget well.
if you intend to allocate 10% to the personal loan, 50% to household expenses, and the remainder to leisure-related spending, you will end up stretching your loan repayment to the maximum. Avoid this by working out a prudent monthly budget dedicating a good amount to loan repayment, by cutting down on unnecessary expenses. Alternatively, in case your fixed obligations heighten your debt-to-income ratio, reduce your loan amount. To understand what works best, plan ahead of time.
👉Think About Part-Prepaying Your Personal Loan
Part-prepayments, especially when done during the initial stages, help you save on the total interest payable. You save on repayment via lower EMIs or a shortened tenor or a combination of the two. While part-prepayments come at a cost, lenders like Bajaj Finserv help you weigh the benefits of repaying EMIs early by offering online part pre-payment calculators. All you need to do is enter the principal, tenor, rate of interest and part-prepayment amount to know your revised EMIs and total savings beforehand. You can then evaluate your gains vis-à-vis the applicable charges.
👉Foreclose Your Loan When You Have Surplus Cash
When you have surplus cash, be it through a windfall gain or a Diwali bonus, you can utilize the liquidity you possess to foreclose your personal loan. Loan foreclosures involve repaying the total balance amount before the due date. While reducing your net outgo, this step also saves you the hassle of keeping track of EMI payment dates.
While lenders levy fees for the convenience of foreclosing your loan, the move is generally profitable, and you can use a Personal loan foreclosure calculator to estimate your net gains.
To use this online tool, all you need to do is enter the following details.
- The loan amount
- The tenor
- Rate of interest
- Select the number of EMIs already paid
- Select the month you want to foreclose the loan
👉Opt For a Balance Transfer, if Required
If during the course of repayment, you find the EMIs becoming a burden on your pocket, you can also consider switching to a lender with whom you can refinance your loan at a lower rate. Availing this facility allows you to save on your net interest payments and also lets you enjoy lower EMIs. That said, like other facilities, balance transfers come at a charge and so, do a cost-benefit analysis to make the right move.
Make use of the above tips to repay your personal loan quickly. One of the first steps by which you can repay your personal loan easily is by choosing the right lender. Opt for an online personal loan from a lender such as Bajaj Finserv that offers a personal loan of up to Rs.25 lakh which you can repay over a flexible tenor of up to 60 months at competitive rates of interest.
Here, you can also opt for the Flexi personal loan facility that helps you reduce your EMIs by up to 45% by allowing you to pay interest-only EMIs for the initial part of the tenor. Further, you can assess how much funding you stand to qualify for by using the personal loan eligibility calculator. Bajaj Finserv processes the loan instantly and gets the amount disbursed to your account in just 24 hours. Check your pre-approved offer for faster loan approvals.