Taking a loan is a critical decision and repaying it on time can be sometimes challenging. Once you get the loan approved, multiple financial liabilities await you. One of them is EMI, it stands for Equated Monthly Instalments. If you don’t have a repayment plan in place, your loans EMIs can eat away a big chunk of your salary.
But do not worry! Follow our tips and tricks that will help you repay your EMIs on time so that they don’t become a burden on you:
Knowing your deadlines
You have a set deadline for your EMI payments. Missing these deadlines can lead to your payments bouncing and incurring penalties. To prevent this, it's a good idea to set up a payment reminder on your phone so that you are aware in advance of when your EMI payment is due. You will find all these details in the loan agreement you hold with your bank. Axis bank also sends reminders to its customers w.r.t. their upcoming EMI payments so that late payment charges and additional fees can be avoided. Moreover, timely repayment of EMI’s has benefits of its own like improved CIBIL score and becoming the bank’s favourite customer.
Selecting your EMI tenor
Selecting a suitable tenure is vital in determining how you will manage your loan repayment. Before committing to the loan, it is essential to review the monthly EMI amount. You can utilise a Personal loan EMI calculator to assess your EMI and amortisation schedule. This will help you plan your finances effectively, ensuring you can cover your monthly expenses and EMI payments without stress.
Also Read: [The process of disbursing a Personal Loan]
Tracking your expenses
It is crucial to have a rough estimate of your monthly expenses for a particular month. If you have upcoming events, such as festivals, weddings, etc., try to set aside some funds in the months leading up to it. This ensures that your EMI payment will be maintained in the following months. Any late payments can result in higher interest payments in the following months. Once you have your budget in place, sticking to your repayment schedule becomes easier.
Prepayment of loan
Repaying a loan can feel tiresome. We recommend paying off your debts as soon as possible. If you can earn extra income through a side hustle or overtime at work, it could expedite your loan repayment. However, it is also essential to be aware of any prepayment penalties or clauses associated with your loan.
Consider refinancing
If you find it challenging to repay your loan, don't hesitate to inquire with your lender about restructuring options. Some institutions will adjust interest rates, EMIs, and tenures based on your repayment capacity. Additionally, you can consolidate several smaller loans into a larger one to benefit from lower interest rates. Alternatively, you can explore the option of refinancing your loan with a different lender that offers better terms and lower interest rates.
Also Read: [Smart borrowing: know when to use a Personal Loan]
Conclusion
When taking out a loan, it is crucial to understand the terms and conditions associated with it fully. EMI payments can become burdensome in the future, so planning your EMI payments wisely is a prudent choice. Missing an EMI payment will increase your financial burden in the following months and adversely affect your CIBIL score. This can also reduce your chances of obtaining loans in the future. We strongly advise you to plan in advance smartly.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision
