Personal loan is one of the forms of unsecured loans given by banks and other non-banking financial companies for any purpose - be it for setting up a home, a wedding, or for some other financial purpose. Personal loans have been very popular in recent times as the unified digital process that is implemented along the loan approval procedure has made it quick and accessible. But to realize the better potential of the personal loan, fast repayment is essential for it helps save on interest with a lower total amount of debt burden, hence it aids in better financial management.
Pay Extra:
It can be the most obvious way of recovering the amount quickly, i.e., to pay extra every month. It does wonders in reducing the outstanding principal and interest; even an extra EMI paid per year will speed up the clearance of your loan. If you cannot pay the extra money all at once, break it down into convenient portions. Ensure you consult your lender about how they feel about additional payments-they could penalize you and settle for lower or less frequent payments.
Choose a Shorter Loan Tenure:
The loan can be repaid within a lesser duration, thus reducing the time needed to fulfill the repayment process. This will fetch more EMIs but significantly reduce the total interest amount paid in the whole tenure of the loan. For example, a 5-year term may also save much interest for you as compared to the latter, at the cost of increased monthly installments.
Don't skip your EMI:
Late payments can damage your credit score and may attract additional fees if the repayment of the loan is delayed for a longer period. You can prevent all these and get a direct EMI debit which should not give you a headache about when the payments are going to be made. Then, you will be able to have a clean credit profile, not incur late fees, and service the loan according to the agreement.
Close Monitoring of Progress:
You should review the loan statement showing periodically how much of your payment is being applied to the principal and how much to interest. The flexibility to adjust your repayment plan in case of any change in circumstances can include extra payments or increased EMIs.
Repayment of a personal loan before the deadline is a cautious, disciplined, and smart utilization of an available option. Following these strategies will place you in a better position to handle your personal loan, and save on interest while gradually striding towards a safer financial future.
