Everyone reaches a point when they want to clear off their personal loan early. In order to save on the interest that you’re paying your lender, you can utilize the part payment process. We have compiled a list of ways for you to pay off the loan sooner than required. By following these steps, you are sure to pay off your personal loan effectively.
If you have a tight budget, it might be difficult to commit yourself to clear off the loan quickly. Every time you have some extra funds, put them aside to use for your personal loan. Before we start, if you’re yet to apply for a personal loan, remember to choose a comfortable EMI and tenure. Your EMI payments affect your CIBIL score. For future loans, it’s important that your CIBIL score is above the average rank.
When you have a loan, you have to pay a certain EMI amount every month without fail. This fixed amount gets deducted from your bank account directly. However, you can always choose to make a part payment to reduce the interest on your principal amount. Do this only if you are left with cash after setting aside your primary expenses like rent, medical, transportation, and other daily expenses. This method is sure to decrease your interest. For example, if you are expected to pay an EMI of 15,000 per month, pay 30,000 when you can. You don’t have to pay the minimum monthly amount. You may also choose to stick to the minimum EMI requirement of the month if your funds are tight.
Say you get a bonus or an incentive of some sort. You can choose to set aside this amount as a yearly part payment towards your loan. Any extra income by saving on some expense or an external perk can be used to pay off the loan faster. Some people set aside a fixed amount from their salaries especially to make an extra payment every year. Not all lenders give you these options. You can always talk to your lender if there is any fee or penalty for doing so. Many lenders like Money View, Bajaj Finserv among others provide their customers with a part payment option to reduce their burden. If you receive a fixed bonus of 50,000 every year, you can consider this to be a part payment of your loan. Planning is the key. When you plan your finances and stick to your budget, you’ll be able to achieve this much faster.
We highly recommend you to check the lender payment programs. Often, lenders provide you with options to pay off your loan quickly. Sometimes, these programs come with an additional fee.
If you have too many loans, and you’d like to reduce high-pressure financial commitments, we suggest you talk to an expert about debt consolidation loans. These personal loans help you pay off existing loans from various lenders at a higher interest rate.
You can also opt for a pre-qualified loan to avoid any impact on your credit score. The pre-qualified loan process is hassle-free and simple. Most loans today have an online, quick process that lets you upload your documents digitally without having to go to any bank or office.
Some lenders are flexible and provide you with a foreclosure option. This way, you can close the loan immediately without having any future EMIs. They might charge you a certain fee to process this. But, in the end, all you need to do is calculate if the interest you are paying for the future payments is higher than these preclosure charges. If you see a massive perk in foreclosing the loan, you can proceed with it.
For Example, if one sells an existing asset, he/she must first look to clear all the existing debts. When you are free of loans, you can set aside the same EMI amount as your savings for future emergencies.
Well, now you know how to close your existing personal loan quickly. To achieve this, you need to create a budget. Once you’ve taken the first step towards paying off your personal loan earlier, you must refrain from taking another loan or debt. First, clear off your existing debt before taking on a new financial commitment.
If you have existing student loans or a credit card debt, prioritize the one that needs to be paid off. You may have applied for a loan for various reasons. Though financial experts don’t recommend anyone to hold debts or loans, sometimes you may depend on such options to fulfill your need at that point in time. There’s no harm in holding a personal loan, but make sure you take smart steps to save on the interest rate. Financial freedom is essential to achieve your future goals and live a stress-free life. A personal loan is a long-term commitment, and the sooner you close it the better it is for you.