We all have dreams. It may be a destination wedding, buying that premium smartphone, building a two-storey villa, a course to further your career or even going on a long vacation. And while most of us have these dreams, we might not always have access to the necessary funds on time. In fact, you might end up in an emergency situation and will be in urgent need of funds. At times like these, Personal Loans come into play.
Personal Loans offer immediate relief during unexpected financial downturns and with the right strategies, insights, and tools, you can deftly manage and even significantly reduce this monthly obligation, ensuring both financial stability and peace of mind.
Extending loan tenure
The relationship between loan tenure and EMIs is direct and straightforward: longer tenures translate to smaller monthly repayments. While this approach undeniably alleviates monthly financial strain, there is a catch. Over the span of the loan, you might accumulate a heftier interest amount. So, while this seems like a tempting choice, a careful assessment is essential.
Consider this: will your income rise in the upcoming years, making it easier to tackle larger EMIs later? Or would you prefer to maintain a steady, predictable monthly outgo, even if it means paying slightly more over time? Utilising the Personal Loan EMI Calculator, you can explore various tenure scenarios, witness the direct impact on your monthly commitment, and form a plan.
Also Read: When should you avail of a Personal Loan?
Interest rates
Interest rates are an important component of EMI. A robust credit history combined with a clean repayment record is like holding a trump card when negotiating interest rates. Lenders often view such profiles as low risk, making them more amenable to offering preferential rates. Even the slightest reduction can create a ripple effect, significantly shrinking your total repayable amount and, by extension, your EMIs.
However, it is crucial to stay updated with market trends. As economic landscapes evolve, interest rates fluctuate. Periodically reviewing market rates can keep you ahead of the curve, ensuring you have the best deal.
Prepayments
Prepayments are like shortcuts in your loan repayment journey. Whenever your financial stars align – be it a hefty bonus, an unexpected inheritance, or even accumulated savings – channelling a chunk towards your loan can make a dent in the principal amount. This not only reduces the loan's lifespan but also the accumulated interest.
Since prepayments may come with penalties, therefore understanding the terms, or better yet, opting for flexible loans like the Axis Bank's pre-approved Personal Loan, can ensure you maximise the benefits of prepayments without any unwelcome surprises.
Also Read: Smart borrowing: know when to use a Personal Loan
Refinancing
Think of refinancing as giving your loan a makeover. If another lender offers lower interest rates, it might be worth transferring your loan. But, as with all makeovers, the devil is in the details. Scrutinise associated costs, check the processing fees, early closure penalties, and the reputation of the new lender. It is essential to ensure the savings from the reduced interest rate are not nullified by hidden costs.
Loan eligibility
Knowledge is power. When it comes to Personal Loans, understanding Axis Bank's Personal Loan Eligibility is your compass. It is an intricate dance of several factors – your credit score, monthly income, existing financial commitments, and more. Optimising these can open doors to not just loan approval but favourable terms for a comfortable EMI structure.
Impact of credit scores
Your credit score is not just a number; it is a reflection of your financial health and discipline. Lenders often use it as a yardstick to gauge the risk associated with lending to you. A high score can be your golden ticket to not only securing a loan but also harnessing favourable terms, including lower interest rates. Regularly monitoring your score, understanding the factors influencing it, and taking corrective measures can position you as a preferred borrower in the eyes of lenders.
Also Read: Can getting a Personal Loan improve your credit score?
The road ahead
The journey with Personal Loans, like all financial ventures, requires a blend of prudence, knowledge, and strategic planning. By understanding the nuances of loan tenure, tapping into the power of interest rate negotiations, leveraging prepayments, considering the prospect of refinancing, and consistently boosting your loan eligibility, you craft a roadmap to efficient EMI management. As you continue to navigate this financial expedition, always remember that every informed decision today paves the way for a secure and stress-free tomorrow.
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.
