5 Ways to Plan for Short-Term Loan Repayment
Wondering about the best short term loans? Personal loans are regarded as the most convenient ways to repay debts over shorter tenures while meeting sudden expenditures including medical emergencies, job losses, buying essential items for the home, renovating the home, taking a much-coveted vacation, wedding expenses, educational expenses and the like. They are easier to obtain and are sanctioned on the basis of your income and repayment capabilities. The tenures of personal loans usually range between 3-5 years although the rates of interest are higher in comparison to secured such as home and car loans.
The short term loan benefits are numerous. Naturally, being unsecured loans (without collateral needs), you can apply for personal loans online and quite easily at that! The whole procedure is hassle-free and involves minimal documentation. It is easier to obtain these type and the purpose of the amount remains flexible as well. All you need is a good credit score, sufficient monthly income for repaying the loan, and a good credit history/track record of managing debit/credit. The amounts are higher up to Rs. 25 lakh in most cases and the processing/sanctioning/approval procedures can be completed in just a few days. This helps you meet sudden needs without hassles and conveniently repay loans over the passage of time.
- Planning for swift repayment of short term/personal loans
- What else should you know?
Planning for swift repayment of short term/personal loans
1. Choose a comfortable and sustainable EMI amount every month.
You can always use a Groww personal loan EMI calculator to determine the amount that you will be paying every month before applying for the borrow. If you are eligible, you can work out the monthly EMI amount for a specific amount. These calculators are easily available online; all you have to do is choose an amount that you can comfortably repay every month and can sustain over the long haul without any missed payments or hitches. The EMI amount should not eat into your savings/investment funds as well.
2. Use the personal loan amount for its original purpose
Keep in mind that this is not free money to spend as you please. It has to be repaid with interest each month and hence you should use the money in a responsible manner. Use the amount for the specific purposes intended without using smaller chunks to buy other things that you can do without. Try and save a little money from the loan amount to repay it faster if possible.
3. Pay your EMIs in a timely manner
Late payments of EMIs will naturally impact your credit score and accrue charges/penalties at the same time. It also puts the repayment plan off track and the overall outgo increases. Make sure that you repay EMIs in a timely manner without any defaults. If you are unable to pay in a particular month, talk to your bank/financial institution, and request a due date extension. You can also request for an increase in the loan tenure or reduction of the EMI amount. Debt consolidation is also possible where you choose to transfer the personal debt to another lender in lieu of a lower rate of interest.
4. Steer clear of new debt
When you are repaying a personal loan, avoid taking on more debt in the form of new credit cards, others type, and so on. Focus on repaying this loan faster and when you have boosted your credit score by doing so, apply for debt again when you need it in the future. Find ways to reduce your spending and increase your income so that you can repay the personal loan easily without piling on more debt.
5. Stick to a monthly budget
Always have a proper monthly budget chalked out in consultation with your family members. Track all expenditures and make sure you stick to the budget. Surplus amounts should be demarcated for loan repayment and for building an emergency corpus so that you do not miss the due date for the same.
What else should you know?
- Choose a longer tenure for repayment if you want the initial personal loan EMIs to be on the lower side. Choosing a longer tenure will help you out immensely since you will have to pay a smaller sum of money every month. This will be more affordable for you. However, keep in mind that the overall interest and cost of the loan will be higher if you choose a longer tenure.
- Choose a lower interest rate by comparing various financial institutions before applying for a personal loan. A lower rate of interest will bring down your monthly EMIs along with your overall loan outgo and tenure as well. You can choose a low interest and low tenure loan for repaying your personal loan swiftly.
- A personal loan balance transfer only works when the monthly EMI considerably goes down owing to a lower interest rate. Check the processing fees and other transfer charges and then compare how much you will save every month. Balance transfers may be a good way to reduce your monthly EMI amount.
- Relationships are key to getting more favorable terms and conditions on your personal loan application. If you already have an existing relationship with a bank or financial institution over the years, you can negotiate terms and conditions better for your personal loan. You may be able to get a lower rate of interest on your borrow as a result. You got allotted with personal relationship manager in case if you find any difficulties with your personal application and you can personally clarify your requests not only on a personal loan or any other banking related queries.
On a closing note
These are some tips on repaying personal loans swiftly while steadily bringing down your EMIs at the same time. With increases in your income, you can put aside a sum of money every month for repayment. Once this accumulates into a considerable amount, repay the remaining portion of the personal loan with gusto. Account for prepayment charges/penalties as well.