How to Reduce Your Personal Loan Burden Effortlessly
Personal emergencies have become part and parcel of modern life due to many uncertainties one has to face. To meet the financial contingencies efficiently, you must always have a sizeable corpus available with you. But sometimes the money you may have saved for a rainy day, is inadequate for the situation at hand. In such a situation, you can meet your financial commitments easily with the help of a Personal Loan.
In recent times, personal loans have become really popular with people in urgent need for money. As a result, there are various Personal Loan options available in markets such as SBI Personal Loan, HDFC Personal Loan, Dena Bank Personal Loan, and many more.
About Personal Loans
Personal Loans are unsecured loans that can be availed for a maximum tenor of 5 years from a financial institution. Lenders offer Personal Loans only after evaluating one’s employment history, age, repayment history, and other factors. While no collateral is required to avail this loan, the interest rate is much lower than the Credit Cards.
Moreover, you need to make the repayments for the Personal Loan on a monthly basis, without any need to make a lumpsum payment. The money can be used as per your requirement, without any need to inform the lender. All these advantages make availing a Personal Loan like Bank of India Personal Loan an ideal option for you.
How to reduce your Personal Loan Burden?
While it is a good idea to avail a loan, during the times of need, you must remember that the repayment of the loan may take up a large portion of your monthly income. Here are a few ways that you can follow to reduce your Personal Loan burden:
1. Pre-pay your loan
In many cases, you avail a Personal Loan for urgent expenses that have to be paid immediately while your funds are yet to come. It might so happen that after a few days or weeks of availing the loan, you receive your due funds. Rather than keeping those funds idle in your account, you can use them to pre-pay your loan. This will not only relieve you from the burden of making monthly payments but will also help you save on the interest cost. Most financial institutions offer a Personal Loan with zero-foreclosure charges such as Dena Bank Personal Loan. You can opt for loan foreclosure without incurring any additional costs. To avail this facility, first of all, contact your lender and express your intentions regarding the foreclosure. You will then receive the intimation regarding the entire amount due from your side. You can make this payment and foreclose your Personal Loan account.
2. Prioritise your debt repayments
If you have availed multiple loans and credit cards, then you must act swiftly to free yourself from a debt trap. This motive can be achieved by prioritising your debts according to the interest rate. Under this arrangement, you will list down your debts in descending order according to the interest rate. Then allocate your funds accordingly, i.e., high-interest debt to receive the highest spare funds and low interest loans to receive a minimum amount. While allocating your spare funds, make sure that the amount allocated must cover the minimum payment amount or EMI amount.
3. Extra EMI Payment
Personal Loans come with a repayment tenor of up to 60 months. During this period, you will certainly receive some bonus, incentives, increment, or promotion at your work. You might also receive cash gifts from your friends and relatives over time. Instead of splurging this money, use it to pay an additional EMI as and when you can for your Personal Loan. You will save money on interest and also pay off your loans easily. You must also create multiple sources of income to strengthen your finances and repay your Personal Loan EMIs easily.
4. Avail a Home Loan Top-Up
If you have availed a Home Loan from any financial institution, you can apply for a Home Loan Top-Up. The facility of top-up is offered by the lender at attractive interest rates which are much lower than those charged against Personal Loans. You can avail a Home Loan Top-Up and use the money to repay your multiple Personal Loans. Not only will you be able to save money on interest cost but will also have to make fewer repayments and have to manage fewer loan accounts.
5. Use existing investments to repay debts
During the normal course of life, you will have invested your money in certain investments and assets. While these investments act as a cover against financial exigencies, you can liquidate your investments or avail a loan against them to repay your high-interest Personal Loan. Rate of interest payable against a Personal Loan is much higher than what is received against fixed-income investments. This is an extreme measure and should be used only in case of absolute emergency.
6. Balance Transfer
Many financial institutions offer lower interest rates against Personal Loan Balance Transfer. If you have been paying your EMIs on time and enjoy a good credit profile, you can transfer your high-interest Personal Loan to a new low-interest Personal Loan. This way, you can save on your interest cost and also reduce the amount of EMI to be paid.
7. Reduce Monthly Expenses
Hard financial times call for tough measures. If the burden of Personal Loan EMIs is becoming unbearable, you must cut down on your leisure and unnecessary expenses such as travelling, dining out, holidaying, etc. Save every penny that you can and use it to repay your Personal Loan before time.
A Personal Loan offers you much needed financial flexibility in times of need, but it can indeed sometimes turn in to a burden. Rather than thinking, prepare a concrete plan to repay your Personal Loan before time and follow it religiously.
To apply online for Best Credit Cards in India, Secured Loans and Unsecured Loans, visit mymoneymantra, the leading online lending marketplace that offers financial products from 90+ Banks and NBFCs. We have served 4 million+ happy customers since 1989.
Talk to our Loan Specialists toll-free at 18001034004 to know more about our products and offers.
& get instant approval