How to manage personal loan EMI payments sincerely?

Personal loans are a great way to raise funds when you have a requirement for urgent capital. It is an unsecured form of finance where you need not offer any security. A personal loan is raised for various reasons such as a wedding, a vacation, medical bills, house repairs, and more. Personal Loans are in huge demand for the past few years as it is a great legal way to raise funds with minimal paperwork. You can use the money as you want but must pay your personal loan EMI on time every month.

Personal loans are different from other loans such as car loans, and home loans. These other loans are used for a specific reason whereas a personal loan can be used for any reason. It is also different from a personal credit line as the funds are provided in a lump sum whereas the line of credit works as a credit card. When you apply for a personal loan there is always an end date, however, the line of credit doesn’t have any. 

Tips to ensure you manage your loan repayments

It is extremely easy to apply for a personal loan but can be tough to keep up with your personal loan EMI. You may give your time and energy in planning to apply for your loan but not much time in thinking about how you’re going to repay it. So here are a few tips to ensure you manage your loans and give timely repayments to the bank. 

• Reminders

You should put reminders on your phone so that you don’t miss the date of your repayments every month and timely pay the personal loan EMI. These phone reminders would help you in saving up for the loan payment throughout the month. Even if you don’t have sufficient funds in your account you can arrange it from somewhere before the deadline of your Personal Loan EMI payment approaches.

• Check your repayment capability

This step should be followed before applying for the loan as you should check if you can pay off the loan or not. Ensure that you understand the terms of the repayment structure, flexibility of repayment, and personal loan interest rate. It would lead to calculating the Personal Loan EMI amount for the total tenure and help you in planning your monthly budget.

• CIBIL score

Maintaining a good CIBIL score is of the utmost importance. It lets the lender determine a borrower’s creditworthiness. It shows in three digits and is proof of your past credit history. If your score is 700 and higher then it is considered a good CIBIL score. It assures your integrity and builds trust between the lender and you. The lender might also let you extend your payment date or tenure considering your CIBIL score. 

• Choose a longer tenure

By selecting a longer duration, the amount of your Personal Loan EMI reduces significantly. This would also relieve some stress and anxiety as it lets go of some of the financial burdens.

• Prepare a monthly budget

Creating a monthly budget would help you in managing your expenses and savings altogether. When you create a monthly budget it helps you determine if you can afford the Personal Loan EMI or not. Your monthly payments shouldn’t be more than half your monthly income. Budgeting also helps you in cutting back some of the costs and saves money. 

• Save money

If you wish to pay your personal loan EMI timely, then you must start saving money. This will ensure you have enough savings in your bank account. You can save money in any form, may it be stocks, bonds, or any fixed assets that you can sell easily.

• The loan amount should be as per your requirement

Before accepting the loan terms you should ensure that the loan amount should be as per your need. You may think to apply for a loan amount that is higher than what you need, based on your high credit. But this would lead to the repayment payment being higher. 

How can you reduce your monthly payments? 

There are various ways you can reduce your Personal Loan EMI and your financial burden:

• Choose a co-applicant

A co-applicant is someone who decides to apply for a loan with you. If you add a co-applicant who has a decent credit score and a stable income it can help you reduce your personal loan EMI. It can be a family member, a close relative, or a friend. 

• Repayment Tenure

If you choose a longer repayment duration then your EMI would be low. As the loan tenure increases personal loan EMI reduces. But before you opt for this option, do remember that choosing the longer duration would lead to a higher interest cost. This would help in relieving your financial burden as well. 

• Low-Interest Rate

Search for loan plans that offer low-interest rates. Interest is the major factor that determines your monthly payment. You can talk to your lender and negotiate for a low-interest rate. If you have a good credit score they might agree to it. Before accepting the loan terms, make sure about the interest rate. 

The Bottom Line

Lastly, you should remember to carefully analyze your financial needs before agreeing to the loan terms. You should choose the right interest rate, loan amount, and lender and budget your financials accordingly to make things easier. These tips would allow you to make smarter and more informed decisions when applying for a loan. By doing so you will pay lower EMIs and finish off the loan quickly. There are several digital EMI calculators available to ease your decision-making process. With just a few steps you can check your loan repayment amount and interest. For the best offers, check out personal loans from Piramal Finance.