A personal loan is one of the most popular financing options for big purchases or instant fund requirements. Since a it is an unsecured loan, you do not have to pledge any collateral while borrowing the loan amount. Moreover, these are multipurpose loans. Therefore, the loan amount availed through can be utilized for various purposes. Be it funding your children’s education, managing wedding expenses or planning an international trip, it can be of great help. Due to all these features, this type of loan have gained massive popularity in recent times.
With leading financial institutions, you can easily avail an instant loan online from the comfort of your home. Though it is a smarter solution to your financial requirements, managing them can often be a difficult task. Inability to plan your monthly EMIs wisely and defaulting the loan can have a long-lasting effect on your creditworthiness. Therefore, if you happen to avail a loan, its timely repayment should be your prime responsibility. Below are a few tips that will help you to understand how to close personal loan early.
How to pay off personal loan faster?
Manage your Expenses
Calculating your loan EMI beforehand will help you manage your expenses. You can get a better estimate of your monthly EMI with the help of an online EMI calculator. You will have to fill in details such as the interest rate, tenure, and loan amount. The result obtained would be the approximate amount of your EMIs. After taking up a loan it is important that you keep a check on your expenses. Manage your finances wisely so that you can make timely repayment of your EMIs.
Prepay your personal loan
You can consider preclosing your loan to reap your loan faster. By doing so, you can save a large amount of money on the overall interest payout. This will not only reduce the overall cost of borrowing but also increase your creditworthiness significantly.
It is to be noted that most of the lending institutions often levy a penalty for loan preclosure. This is done to compensate for the interest amount lost. With prominent lending institutions, it is possible to avail personal loans with minimum prepayment penalties. It is advisable to check the loan prepayment charges levied by the lenders before availing.
Round up payments
This is one of the finest ways to pay extra money to the lenders. If you consider rounding up your monthly installments, you can save your money in terms of interest by shortening the loan tenure.
Make bi-weekly payments
Instead of repaying your loan through monthly installments, you can start by making payments every two weeks. This is called as bi-weekly payments. You can utilize the extra income that you receive from your bonuses, tax refund money, and monthly savings to pay off your personal loan early.
Refinance your personal loan
If you refinance a personal loan, you would be replacing the existing loan with a new one. Refinancing your loan would provide you the opportunity to get a lower interest rate than what you’re paying on your current loan. If your credit score has improved over the years, you may be able to qualify for a better interest rate on a new loan. Lower the interest rate, lower will be the overall cost of borrowing. This can reduce the repayment burden of your loan significantly.
Refinancing your loan would also provide you the opportunity of shortening your loan tenure. With a shorter loan tenure, you can get rid of your personal debt sooner.
Now that you have a better understanding of various ways regarding how to repay the personal loan faster, ensure to make the most of them while making your loan repayment. Repaying it faster can help you save a large amount of money in the long run. To reduce your repayment burden, it is essential that you settle for a low interest rate. You should compare various loan offers provided by different financial institutions before availing a loan. This will help you avail a loan that best suits your needs.
Bajaj Finserv Personal Loan available at Finserv MARKETS comes with competitive interest rate and other lucrative features such as instant approval, quick disbursal, and flexible repayment options, etc. Minimal documentation and hassle-free online application process are some of the other advantages of this loan.
Lastly, do not forget to read the terms and conditions of your loan agreement carefully before signing your loan agreement. This can help you avoid inconvenience in the later stages.
You can also read about impact of GST on personal loan.