5 Tips on How to Pay Off Your Personal Loan Faster
Posted on Thursday, April 27th, 2017 | By IndusInd Bank
Taking a personal loan comes with the obligation of repaying the amount in fixed monthly instalments over a decided period of time. If you fail to repay on time, however, you are liable to pay penalties for late payment, which nullifies the benefits of availing a personal loan in the first place. In addition to this, late repayment has a bad effect on your credit score, which in turn reduces your credit-worthiness in terms of future borrowings.
If, on the other hand, you repay the loan amount before time, you stand to gain even more by saving on the amount of interest that you end up paying. You must ensure, therefore, that not only do you have the resources to meet your repayments on time, but that you manage to stay ahead of your repayment dates. Following are some tips which could help you repay your personal loan faster:
Prioritising Repayment of Loans
In case you have outstanding loans, it would be prudent to identify the costliest ones and try to repay them first. These would be loans for which you are paying a higher rate of interest. You would be well-advised to allocate your funds primarily towards paying off such loans while maintaining the regular payments on loans with lower interest rates. This strategy helps you minimise the total amount of interest that you would pay on all the loans by eliminating higher interest amounts.
Consolidating Your Debts
If you have multiple debts to pay off, it could be quite daunting to pay interest rates on each of them, while keeping track of individual payment dates. In such a situation, it is worth considering a secured loan against property to consolidate all your outstanding debts in to one. They attract comparatively much lower interest rates, you can be more organised and can choose the instalment amount and tenure per your convenience.
Making Prepayments with Monetary Gains
In case you make some extra money, be it through an increased salary, a sudden bonus or gains from an investment, use it to make a prepayment against the loan. Making prepayments reduces the tenure of the loan and the lesser the tenure of an outstanding loan, the lower is the rate of interest it attracts.
Paying Credit Card Dues Using Personal Loans
A delayed credit card payment leads to growing accrued debts because of substantially higher interest rates levied on them. By converting these debts to EMIs, you attract lower rates, greater flexibility in repayment and the option to make prepayments.
Making Lifestyle Changes
You could try and reduce your unwanted spending and make more accommodating lifestyle choices for a brief period to save a little more in order to pay higher EMIs.
Opt for a personal loan from IndusInd Bank for the best interest rates and our unrelenting support in helping you repay the amount.