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Learn How Your Loan Repayment Works

By Finserv MARKETS - Jan 30,2019
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How Loan Repayment Works

When you opt-in for a loan, it’s always important to understand how loan repayment works. If you are looking to avail a loan, it’s always wise to go in for one at a much younger age since this would help you pay off your loan before you retire. The quicker you pay off your loans, the more secure you are in the future.

How Can You Repay Your Loan?

Proper and regular repayment of your loan is essential for a good credit score. There are a number of options available to repay a
personal loan.

Equated Monthly Installment (EMI) is the procedure that is followed by financial institutions. It is a combination of the principal loan amount and the interest on the principal. Your total repayment amount will then be divided into monthly installments across the tenure of the loan. Your lender will fix a date for you to repay the monthly EMI until you repay the total loan amount including the interest. The interest component of your EMI would be higher during the initial years, but in the later years, the same decreases and the principal amount forms the higher component of your EMI. Finserv MARKETS offers flexible repayment tenures. Also, there is charges for prepayment or loan foreclosure.

Different Repayment Options of Loans

With loans from Finserv MARKETS, you could opt for different ways to repay your loan and reduce the burden of EMIs.

Higher EMI:

You may opt for higher EMIs. This would help you to repay the principal amount of your loan much faster, which, would ultimately lead to decreased cost of the loan in terms of the interest rate.

Prepayment:

You can offer to make a one-time partial prepayment of the loan. This would reduce the burden of the principal amount along with interest rates on the principal as well.

Increasing Monthly EMI:

You may choose to increase your monthly EMI of the loan as your income grows. This would quicken your repayment process.

Invest:  You can look at investment avenues in various market instruments like bonds, stocks or funds (equity, debt or a hybrid mix of both) to cover for your EMI payouts. It is advisable that you talk to an advisor before proceeding with this option as you need to be fully aware of the market conditions as well as the cost of investment in order to earn positive returns.

How EMIs help you plan your finances?

Though EMIs are a type of repayment method for any kind of loan, they also help in financial planning as well.

  • Since your aim is to be free from the obligation of your loan, an EMI helps as it puts you on a tight budget / financial plan every month.
  • Personal emergencies can crop up anytime, hence, it is always better that you have a corpus to pay your EMIs.
  • Before you agree on an EMI amount, make sure your EMI does not exceed more than 40% of your monthly income.
  • With benefits like loan transfer and schemes to avail lower interest rates, your monthly EMIs could be brought down.

Timely loan repayment can help you maintain a good credit score. This would also help with getting better options from financial institutions if you wish to go in for a loan or a credit card in the future.

Therefore, it is very important that you follow a strict guideline and repay your EMIs at the committed time, without missing out on a single monthly payment.

With Finserv MARKETS, you can avail a Bajaj Finserv Personal Loan online in a quick, easy and hassle-free way. What’s more? The entire process is online and can be processed right from the comfort of your home! Also, you get the freedom of choosing your loan repayment tenure that ranges between 12 – 60 months. What more could one ask for? Go ahead and apply for a personal loan from Finserv MARKETS, today!

“Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!”

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522