Personal loan is taken by an individual in situations of financial emergencies. As personal loans have gained immense popularity in the market, a lot of people have been going for multiple personal loans too. A person can qualify for multiple personal loans if he/she has repayment capacity of the loans from his/her income along with the usual expenses. Before going for personal loans, keep in mind that they have to be cleared within the tenure and prepare yourself accordingly. So, how can one manage multiple personal loans efficiently? Let’s discuss how:
Pay EMI on time
The most important requirement of the loan – repayment. Paying EMIs on time helps you build a good CIBIL score and maintain a good relationship with the bank or Non-Banking Financial Corporations (NBFC) as well. Paying EMIs on time also builds trust with the lender and should you feel the need for another loan in the future, they will be happy to assist.
If you already have a loan approved and feel the need for another loan, look for options. The safest option is taking a top-up on the already existing loan and if that doesn’t suffice then only go for a different loan. Always remember, multiple loans, multiple EMIs, so check your income flow and tread cautiously.
When there is a set amount going towards the EMIs of the loan, create a budget around it. It is safe to not splurge unnecessarily and save as much as you can during your repayment period. Saving money can not only help you during an unforeseen event but may also help you prepay your loans.
Don’t create additional credit card debt
The importance of this point cannot be understated. If you go on to create additional credit card debt despite having multiple loan accounts, you are at risk, without quite being prepared to take it down. Credit card interest rates are in the range of 35-40% p.a. So, accumulating multiple credit card debt will force you to make higher minimum payments, leaving you with very little in your pocket for the given month. It’s best to avoid such situations and save yourself from a financial burden in the future.
Focus on pre-closing one loan at a time
Organizing all your debt payments is the best way to avoid payment default. If you have extra funds, you might consider pre-closing your loan. But make sure to pre-close one loan at a time. Now, this entirely depends on the number of loan accounts that you have. If you have two accounts, you can manage to pre-close one of your loan accounts in a few months, but if you have 3, it might be too much for the moment. While you focus on pre-closing, make sure that you first pre-close the account with the highest rate of interest and then choose to pre-close your other loan accounts before your credit card accounts.
Prioritise Your Loan Repayment
It is prudent that you make your repayment a priority. Personal loan repayment should be of utmost importance. It is advised that during the repayment of the loan, reduce the usage of credit cards to avoid more debt. Failing to make repayment of your loans can have huge impact on your CIBIL score and that won’t be a favourable situation to be in. Therefore, avoid creating more debts and build a budget within your means.
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