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Save on EMIs by Compiling Your Current Loans
Posted on Monday, October 3rd, 2022 | By IndusInd Bank
Taking out loans provides an easy solution to handle the cash crunch at the moment. But, if you have taken multiple loans to manage your unique needs, then repaying them can become challenging over time because of different payment schedules, varied interest rates, and the overall cost of each debt. Many people take home loans and take on credit card loans or personal loans to pay for further education, wedding expenses, medical emergency, etc. Experts believe that when you effectively manage all your EMIs, you can gain financial independence soon. However, if you are struggling to manage all the EMIs, then you need to prioritise what you need to pay first to avoid paying very high interest on some of the personal loans or other loans.
As a smart financial strategy, you should repay more on loans that carry high-interest rates – such as personal or credit card loans. However, larger loans such as home loans are comparatively cheaper and additionally provide various tax benefits. Hence, it is important to know how to save on interest costs to be debt free faster.
Debt Consolidation:
If you are paying several EMIs with a different schedule, then it makes sense to bring everything under one umbrella to streamline your payment schedule. You can do this by consolidating all your loans into one for better EMI management. You can also talk to a relationship manager at the bank to understand if you can restructure your loans as per repayment capacity. You can also use a personal loan EMI calculator to compute your monthly EMIs and compute your preclosure payments.
So, how does consolidating your debt help lower the EMIs?
No Multiple EMIs:
You can use a personal loan EMI calculator to check the total amount you will be paying in monthly payments after you consolidate all your loans. Managing various loans can be taxing as you have to keep a track of multiple timelines. In case you miss one payment towards one loan, then you have to bear the burden of late fee charges as well.
Reduce Monthly Outflow:
Use an online PL calculator after discussing with your bank’s relationship manager your new consolidated loan amount. When you bring together all high-interest loans, you bring your EMI down. When you club the consolidated plan with longer tenure, you bring your monthly payments down as well. This option can give you a chance to divert a part of your income towards further savings or investments.
Flexible Terms:
If you choose this option of debt consolidation wisely, you can repay the loan conveniently as well. This is especially true if you are facing rigid terms for your current loans. For instance, when you take a personal loan at a low-interest rate (some banks offer them for as low as 10.49%), the one with nominal prepayment charges, low-interest rates, etc. will help you pay back the loan easily.
Before consolidating your debt, ensure you have all the information at your disposal in terms of tenure, EMIs, and new interest rates. Select the loan that offers the best value to you and makes the debt consolidation as affordable as possible.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
