Imagine you're on a rollercoaster ride called Personal Loan. This thrilling ride is designed to fulfil all your financial needs, whether for that dream vacation you've always wanted, a long-awaited home renovation, or an unexpected medical emergency.
But as with any ride, you need to know how to navigate the twists and turns. In the case of a Personal Loan, this means understanding how to pay it off faster and save on interest. Sounds like a daunting task? Well, buckle up because we're here to guide you through the ride!
Challenges in paying off a Personal Loan early
- High interest rates: While Personal Loans offer convenience, they often entail higher interest rates when compared to other loan options. This means you end up paying more over the loan tenure. The interest rate can be a significant factor in the total cost of the loan, making it a challenge for those who wish to pay off their loan early.
- Prepayment penalties: Some banks charge a penalty (prepayment charges) for paying off your loan early. This can make early repayment less attractive.
- Budgeting: Making extra payments towards your loan means tightening your belt, which can be challenging.
- Balancing other financial commitments: When juggling multiple financial commitments, prioritising Personal Loan repayment can be challenging.
Also Read : Can getting a Personal Loan improve your credit score?
Tips for paying off Personal Loans early
- Increase your EMI: If your budget allows, consider increasing your monthly EMI. This will help you repay the loan faster and save on interest.
- Make use of additional income: Got a bonus or a windfall gain? Use it to make a partial payment towards your loan. It can help you reduce your loan burden. For example, you can use your Diwali bonus to make a partial payment towards your loan.
- Borrow from low-interest sources: If you have a low-interest source of funds like a PPF Account, consider borrowing from it to pay off your high-interest Personal Loan.
- Use a Personal Loan EMI Calculator: Tools like the Axis Bank Personal Loan EMI Calculator can help you plan your repayment strategy. It's like having a roadmap for your journey - you'll know exactly where you're going and how to get there.
- Use incentives and increments: If you're in a job that offers incentives for meeting targets or gives regular increments, consider using these additional funds to enhance your EMIs.
- Compare prepayment fee with interest savings: Most banks charge a prepayment fee for paying off your loan early. Before deciding to prepay your loan, compare this fee with the interest you will save.
Conclusion
Remember, paying off a Personal Loan early is like running a marathon - it requires planning and discipline. With these tips in hand, you can cross the finish line faster and celebrate your financial freedom!
Navigating the Personal Loan rollercoaster ride doesn't have to be scary. With the right strategies, you can pay off your loan faster and get off the ride sooner! Remember, the key is understanding your loan terms, planning your budget, and making informed decisions. So, are you ready to take control of your Personal Loan repayment journey? With these tips and tools, you're all set to become a master of Personal Loan repayment!
Also Read :Smart borrowing: know when to use a Personal Loan
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.
