Personal loans act as a great help when you need emergency funds to finance education, medical emergencies, marriage, travel or home renovation. The borrower can use these funds as per their jurisdiction without being answerable to anyone. Loans Jagat provides an excellent platform to choose the best of personal loans in Delhi/NCR by comparing terms, conditions, rate of interest and other charges offered by different lenders.
However, once you have used the loan amount, repayment tends to be cumbersome. Personal loans start feeling like a liability for which you have to chuck out a considerable part of your income for repayment. One tends to be fully engulfed into the debt trap while keeping in line with high EMIs and no savings. But being a little smarter and wiser can help you manage personal loan burden smoothly.
The foremost thing is to get a clear picture of your outstanding loans (personal loans, credit cards, etc) along with their interest rates. The next step includes working on how you would repay each loan. Going by banking economics, there are two ways of repaying the loans:
- Debt Snowball Method: Opting for this method will let you pay off the loan with the least amount first and the one with the biggest amount in the last.
- The Stack Method: Opting for this method means you repay the highest interest rate loan first and the least interest rate one in the last.
Either of these methods aids in quick repayment of loans. After you have selected the method of repaying the loan, follow the below-given tips to reduce the burden of your personal loan.
- Repay the highest interest rate loan first: The higher the rate of interest, the higher the amount you pay on a monthly basis. It is imperative to get rid of the loan with the highest rate of interest first as it significantly reduces the burden of your monthly expenses. It can be followed by paying off next costliest debt and so on.
- Reduce your expenses: Personal loans can be repaid quickly with proper management of funds. It is important to cut down on unnecessary expenses or expenses which can be put on hold for some time and are easily avoidable. Checking on one’s shopping and dining habits can help tremendously to save a good amount.
- Making extra EMI payment: If you have enough funds in hand sourcing from a gift, increment, bonus etc. then try to pay an extra EMI so that you get to pay the loan amount faster and also save on some interest.
- Use current investments to repay loans: To be debt free, one needs to make some diligent efforts. If you have some investments in the form of fixed deposits, PPF, mutual funds, insurance policy etc. then you can chuck them out and prepay your debt. However, it is advisable only in extreme conditions as you might lose the interest on your current investments and may end up paying prepayment charges which destroy the sheer purpose. Loans Jagat helps you with comparing the pre-payment terms and conditions along with the charges which the lenders incur if you pay the loan amount before the end of tenure so that you can make a wise decision.
- Dispose of the assets with low yield: If you own a property with not too great prospects, low rentals or high maintenance then it is advisable to sell it off and pay for your debts and personal loans from the surplus amount which you will receive on its disposal.
- Refinancing: Refinancing means to pay for your present personal loans by taking a new personal loan from the same or different lender for better tenure and interest rates.
- Review your loan: As a layman, one doesn’t have too much knowledge about personal loans. It is always advisable to review your loan time and again to save on the money.
Abiding by these tips can also boost your credit score which is great if you are planning to take personal loans again.