One of the most significant benefits of repaying your personal loans faster is a chunk of savings on monthly interest. When you are regular with your payments, it betters your credit score. In addition to this, it ensures that you have to pay less overall due to decreased amounts paid in interest, leading to being debt-free sooner.
Before delving into how you can repay your instant personal loan faster, you must examine what you owe before planning a quick repayment solution. This will help you prioritise your repayment process. It would help if you also analysed your income and expenditure to see how much space you can make in your budget for faster disbursement.
Tips to Repay the Personal Loan Faster
Increase Your Monthly Loan Repayments
If your personal loan comes with a variable interest rate, you can change your repayment amounts. Increasing your monthly repayment every month by making more space can lead to you owing less through interest and save you a prolonged personal loan tenure.
Budgeting and Cutting Back Wherever Possible
The monthly loan interests can take a toll on finances if you have to keep repaying for long periods. Through efficient budgeting, you can reallocate your funds to pay off your loan faster by cutting down on unnecessary expenses. In doing so, you will be in a better position to pay off your loan as soon as possible.
Double the Frequency of Your Repayments
Apart from increasing the sum repaid every month, you can also increase the frequency of your repayments. By repaying every fortnight rather than every month, you will pay for two extra weeks since there are 26 fortnights per year. Incorporating these practices in your monthly budgeting can save you a lot of money in the long haul.
Debt Consolidation Loans
If you have many loans that you need to pay monthly EMIs for, it can be challenging to keep up with all of them and their separate interests. To diffuse this issue, financial consultants often suggest taking a debt consolidation loan. Debt consolidation loans help with the following:
- They club all your loans into a unified entity.
- They allow for a convenient, single pay out per month.
- They often help you pay less due to a single interest imposition as opposed to multiple.
Following such advice can help ensure long-term financial security. You save more money and pay off your loans much more efficiently through debt consolidation.
Start with the Most Expensive Personal Loan First
Starting your repayment process with your most expensive loan can significantly reduce your monthly personal loan interest rates. This leaves more cash available for other repayments and a decrease in your overall personal loan tenure. Following this strategy will help you become debt-free faster, bring you lasting peace of mind, and motivate you to lift your financial burden faster.
Round-Up Your Personal Loan EMIs
If your personal loan payment is Rs. 2215.63 every month, rounding it up to Rs. 2500 is more convenient to set aside and can make a big difference eventually, as it saves your interest money and shortens the loan tenure. If you cannot increase the repayment amount by a lot, or the frequency, rounding up the amount will be unnoticeable every month but can save you a lot in the long term.
Watch Out for Prepayment Penalties
Prepayment penalties refer to fixed fees set in place by some lenders to discourage the borrower from paying back early and losing out on interests. You can avoid this extra cost by choosing a lender who does not levy this penalty.
Go the Extra Mile with One Extra Payment
Throughout the year, there might be some chunks of money that come in and out. This can be in the form of festival bonuses or even tax refunds. Putting these funds to use is a great way to speed up the repayment of your personal loan. Even if it is a one-time extra payment, it is best to use it for repayment if you get extra cash. Whenever you have money in hand, using it to contribute to loan disbursement will ensure that you enjoy EMI-free months sooner.
When you avail of an online personal loan from Fullerton India, you can check your eligibility, calculate your EMI and get instant approval all in one place! Financial health is just one click away with our competitive interest rates and online loan approvals!