Personal Loan repayment plan can give you peace of mind and save you money
Posted: Nov 03, 2018
Personal Loan repayment plan can give you peace of mind and save you money
With uncertainty in the life, the life can throw certain tantrums in front of you. You may have to deal with certain surprises in the life, which come unexpected and all of a sudden. The uninvited emergency conditions and the need for the resolution of the certain life liabilities can force you to take a Personal Loan.
The Personal Loan is one aspect, which proves useful during the times of the emergency and especially when you allocation of additional funds to meet your financial requirements. Getting a Personal Loan can ease out your financial crisis and can get you out of the troubling situations. The Personal Loans allows the people in getting rid of various emergency situations like Covering Medical Bills, Covering Wedding costs, for debt consolidation and to cover various other requirements and needs. The Personal Loans can be availed by any salaried or self-employed professionals and a person needs the lowest documentation to avail Personal Loans.
The Personal Loans, however, are slightly costlier loans as compared to secured loans. However, with various salient features of the Personal Loans makes it one of the most popular loan types, despite the slightly higher rate of interest. An instant approval loan type, this offers a really quick financial support to the people who is in dire need of the financial help to cover their various tasks.
However getting a Personal Loan also put on a liability on the shoulders of a person in the form of the repayment of the Personal Loan Amount. As the Personal Loan is a costly affair to deal, the Personal Loan must be dealt with as soon as possible. Choosing the Right Personal Loan is a must in order to avoid trouble during the times of the repayment. While the financial crisis can come in anyone’s life, it is a wise idea to take a Personal Loan and get out of the situation, but at the same time, preparing your mindset for the early repayment of the Personal Loan, allows you in enjoying a debt-free life, by planning for the debt repayment program.
How can prepayment of Personal Loans Work?
The prepayment of the Personal Loan can be done in two ways; one is the part prepayment, while the other is the full prepayment.
Full Prepayment of Personal Loans
The full prepayment of Personal Loan allows a person to pay the outstanding balance of Personal Loan, at once and close the entire Personal Loan all of sudden. However, you must remember that there are certain restrictions when it comes to the prepayment and generally there’s a lock-in period of one year, after which a person is free to prepay their existing loan, entirely.
Partial Prepayment of Personal Loans
Partial Prepayment of Personal Loans happens when you have some lump sum, which you want to pay towards the Personal Loan. The partial prepayment of personal loan allows bringing down the EMIs and the total principal amount, which needs to be paid. The partial prepayment and full repayment differ in one aspect, that in full repayment, a person pays the entire remaining outstanding Personal Loan and closes the loan completely, while the Partial prepayment of a Personal Loan allows reduction of the outstanding balance due and also reduces the EMIs in the process. Keep in mind that in partial prepayment, if you make a significant amount as a contribution, you will see a noticeable difference in your EMIs. The Personal Loan doesn’t get closed under the partial prepayment of Personal Loans.
However, you need to check bank terms and conditions for the prepayment of Personal Loans, as there are several lending agencies, which levy a penalty charge on the prepayment of Personal loans; either it is full prepayment or partial prepayment.
Effect of Prepayment on CIBIL Score
Not impacting your CIBIL Score either positively or negatively all of a sudden, the prepayment of the ongoing personal loan, only show the effectiveness in the long run. The successful closing of the Personal Loan can raise your credit score but it happens over the time.
While, the partial prepayment of the Personal Loans shows no effect at all, at your credit score. The partial prepayment only reduces your burden of the Personal Loans, thus helping you towards the easy EMIs and thus helping in the process for the successful loan completion.
Here are some steps for the Personal Loan Repayment, which you should consider before choosing your Personal Loan:
Make a choice of EMIs you are comfortable in
The affordability is the key here. While there may come a need for the additional funds in any person’s life, the Personal Loans can always come to the rescue for those. However, while opting for the personal Loan, one needs to stay very clear and alert on what the liabilities, a person is going to have in the future. The EMIs are one of the liabilities, which come directly with the Personal Loans and a person needs to pay them every month, in order to avoid loan going default.
Thus, a Person needs to stay very practical when it comes to the EMI. Choose the EMI that you can afford to pay every month. If you are already having some other liabilities, the wise decision will be to choose the lower EMIs. Choosing the lower EMI can allow you to have a relaxed life, and thus ensure that with comfort, you can repay your Personal Loan. As per the experts, the EMIs should not constitute more than 40% of the total income and thus stay within the limit, while choosing the EMIs on Personal Loan.
The higher EMI can help you in getting rid of the Personal Loan quickly, but at the same time, it may disrupt the normal lifestyle and a person may feel extreme pressure, in everyday’s life. The lower is the EMI, the ease is the repayment of the Personal Loan, however, the costlier is the Personal Loan and vice versa. Thus, choosing the right balance of the EMI, which you can afford to pay every month is a decisive factor in the repayment of Personal Loan.
Striking the balance between your EMI Amount and the total number of EMI, which you need to pay is utmost important, as the less is the number of EMI, you need to pay, the speedy is the repayment of your Personal Loan. Closing the Personal Loan as quickly as possible allows you in saving a certain portion of the money, by avoiding paying additional funds to cover the interest; however, what people risk in, is increasing the EMI amount, by not calculating the expenses required to enjoy your lifestyle.
Repayment of Personal Loan involves a strategic planning on various factors considering your lifestyle and your liabilities. What you can do is, analyze your expenses required every month and then make a decision on what EMIs, you can pay every month. You must remember that the total interest amount payable can be brought down by choosing the highest possible EMI that you can pay comfortably every month. So, it’s the total number of EMIs along with EMI Amount, which accumulatively decides your Personal Loan repayment.
Avoid delays in EMIs
Delaying payment of EMIs can result in affecting your Credit Score and at the same time, it may attract a penalty charge. You must do everything in power to avoid such delays. There may be a situation, that you may not pay the EMIs on time, and in those cases, contacting directly with the banks and explaining your situation to them can help you with some extension period on your EMIs. There are conditions (depending on their sole discretion) when a bank can offer you an extension to pay your EMIs.
In case, you are struggling to pay your EMIs every month, you can request your bank to restructure your EMI module and can ask them to lower your EMI Amount, every month. While, this, in turn, can increase the total interest amount to be paid back, but on the other hand relieves you with the pressure of paying EMIs, which you find difficult to manage. Lowering your EMI can help you in better management of your income and will ease out your repayment of Personal Loans. Besides decreasing your EMI Amount, there’s another alternative if you are feeling a burden of your Personal Loan; transfer of your existing Personal Loan debt from the Existing Loan to the newer loan, which carries a lower interest rate.
Prepayment of Personal Loan
Prepayment of any loan allows in saving a lot of money as interest, which needs to be paid to the lenders, and at the same time, allows a person in closing the loan all of an instant or can speed up the process of the early repayment of the Loan. The same logic applies to the Personal Loans.
In case, you got some extra money in hand, you can utilize the money to prepay your Personal Loan. With the Prepayment of Personal Loan, you are offered several benefits; one in the form of the relieving you from the debt, the other is the advantage of paying less interest to the bank incurred on the Personal Loan. The Prepayment of Personal Loan comes with lots of benefits, and most importantly it relieves you of the Personal Loan liability, early. It does imbibe a great feeling within, when you are free from all sorts of liabilities and burden of loan. Clearing debt in advance allows you with getting rid of all sorts of mental tension, which creep in because of outstanding loan.
Prepayment of Personal Loan comes with certain restrictions
However, there are certain restrictions, which comes with the prepayment of Personal Loan (depending on the bank). Most of the Banks impose penalty charges on the prepayment of personal Loans. Thus, before opting for any such of prepayment of your Personal Loan, it is advised to cross check from your bank, if they levy any penalty charge on the prepayment of Personal Loans. Thus in case, your bank levy a penalty on Personal Loan, you need to pay penalty charges for prepayment of Personal Loan. Thus, it advised, if you are still looking for the Personal Loan, opt for the lender, which levy no charge on the Personal Loan prepayment, and if you are already an existing loan borrower, cross check from your bank for the same.
The Prepayment of Personal Loans offers several benefits to a person, especially with the ease of tension of carrying a Personal Loan, and with saving quite a good amount of money to be paid as an interest at your Personal Loan. Make yourself better knowledge equipped for your Personal Loan and plan for your Personal Loan repayment accordingly. Weigh down all the factors involved in the Personal Loans and opt for the best Personal Loan. Know about the repayment terms and conditions and take a personal loan, comparing all salient features involved in the Personal Loan.
If you are pretty sure, that you may go for the prepayment of your Personal Loan, you should consider the prepayment conditions as laid down by the bank, with deep analysis and opt for the lending agencies, which allow the prepayment of Personal Loan, with no penalty charges.
There’s a piece of advice; it is being said that borrow only what is required. Borrowing more than what you urgently require will get you in trouble, as the money goes wasted. Also, whatever you borrow, repay it quickly. The quicker you repay, the more is the peace of mind and more is the relaxation you can achieve for you. Since the rate of interest for the Personal Loans is considerably high, the quicker you repay your personal loan, the more you can save. Prepayment of loan allows you in saving a considerable amount of money and helps you in getting yourself relieved of the burden quicker.