Whether you are buying a property, a car or the latest high-end mobile phone, loans have become an integral part of your life.
These loans typically come with a repayment period. The repayment period varies from one loan to another. Failing to repay the loan on time can affect your creditworthiness and may impact your relationship with the vendor.
But there's no need to worry! We offer some tips on how to repay your loans on time.
Keep these factors in mind before you avail of a loan:
- Budget: It's vital to create a realistic budget to allocate funds for repaying your loan and cover essential expenses.
- Interest rates: You must understand the interest rates associated with your loan and understand the repayment structure and fees associated with it.
- Early repayment charges: Check your loan agreement to see if there are any penalties for repaying it earlier. If so, consider negotiating on those terms and choosing the best option.
- Communicating with the lenders: Maintain open communication with your lender. If you encounter difficulties, discuss them with your lender and explore alternative payment arrangements, if necessary. Axis bank sends reminders when your repayment date is fast approaching and shares various information packets to aid faster repayment.
Banks and vendors offer various tools for timely repayment of your Loans. Read on to stay on top of your financial responsibilities:
Set up reminders:
Ensure you set up a monthly reminder before your EMI due date to prevent missing payments. This will help you remember to keep your account adequately funded in time for the deduction. Make sure to set the reminder at least five days before the due date to allow ample time for gathering funds in case your account balance needs to cover the EMI amount.
Also Read: [How inflation affects your home loan interest rate ]
Set standing instructions:
Failing to repay your EMIs or dues punctually can accumulate debt and may incur late payment charges. To prevent any payment delays, establish Standing Instructions (SI) in your bank account. This instruction directs your bank to make regular payments of a specified amount to the lender’s bank account. This arrangement is also known as a banker's order.
Set an auto debit facility:
To avoid accruing interest and penalties, you must pay all your dues promptly. For instance, you may be tempted to pay the minimum amount on your credit card loans or dues. However, making only the minimum payment will add to the interest rate, resulting in a much higher overall payment. Therefore, you can use the Auto Debit facility to pay your credit card bills promptly.
Set BBPS payment services:
You can plan your monthly expenses and pay your EMIs using BBPS payment service. You can open any of your favourite UPI enabled applications and click on the option of Bharat Bill payment services. Then search for Axis Bank Limited Digital Loan as the biller, enter your loan account details and make the final payment. Follow this manual for step-by-step details.
Finally, here are some tips to repay your Loans faster:
1. Make extra payments: Reduce your loan by making extra payments when you can. This lowers the principal and shortens your loan term.
2. Bigger down payment: A substantial down payment speeds up repayment, lowering your monthly EMI.
3. Shorter tenor: Opting for a shorter term, which may mean higher EMIs but leads to lower interest rates and quicker debt-free status. Use our free EMI calculator to choose the right term.
4. Loan foreclosure: If you have surplus funds, consider paying off the entire loan immediately to save on future interest. Review the terms for any foreclosure fees.
Also Read: [Pros and cons of opting for Personal Loan prepayments ]
Conclusion:
Start by understanding the specifics of your loan, prioritising your payments, and making extra payments whenever you can. Developing a realistic budget is essential to monitor your expenses and ensure you repay your loans on time.
Additionally, remember to use windfalls or bonuses to make larger payments and reduce the principal balance. With diligence and a strategic approach, you can pay off your loans ahead of schedule, achieve financial independence, and secure a brighter future.
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
