Nowadays, personal loans have become a quick and popular way to meet various needs. Whether it is an urgent hospital bill, your child’s higher education charges, a postponed wedding, or a dripping roof, a personal loan usually comes to the rescue like a well-off friend. Personal loans are unsecured and don’t need any collateral. That is why people depend on them by crores. But here is the catch, personal loans are not so simple to consider but generally bear a higher rate of interest compared to gold or home loans.
Just Paying EMIs? Not Enough
If you’re only paying your monthly EMI, you’re playing a long game. And that game may end up costing you more. To really save and reduce the tenure of the loan, you’ll need to do something out of the ordinary. A mix of strategy, timing, and smart decisions can reverse the situation. Let’s find out how.
1. Add More Than Just EMIs
Got a little more than usual this month, put that towards your loan. Even an extra payment, however small, is directly subtracted from your principal. Less principal = less interest. Mathematically simple, impact gigantic. You don’t need to be wealthy to do this. You just need to be regular.
2. Change Banks, Eliminate Interest
If your bank rate is not just, don’t hesitate because of loyalty. There may be better rates being offered by other banks. Balance transfer can lower EMIs with no interest in the long run. But don’t jump check additional charges, and if uncertain, seek advice from a money advisor before jumping.
3. Invest Bonus Money Smartly
That surprise gift, holiday bonus, or tax refund? Don’t spend it. Invest it in your loan. One lump-sum payment can reduce your loan by a huge amount. You’re like you hit the fast-forward key on your debt.
4. Bundle Up Your Loans
Got multiple loans? Consolidate them into one. Loan consolidation makes your payments easy and, if planned well, saves you overall interest. One EMI, less hassle, better savings.
5. Request Concessional Terms from Your Bank
Banks cherish good borrowers. If you are a prompt payer, request a cut in rate or reduced EMI. Most lenders would like to oblige devoted borrowers. It does not cost you anything to ask and you may be thankful that you did.
As per RBI guidelines, banks cannot charge a fee for prepayment of floating-rate personal loans. That is no fine for prepayment. Use it to your advantage.
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Final Thought
A bit of forethought, some clever thinking, and constant follow-through can have you out of your loan sooner. Save, live it up, and think about living, not paying.
