Have you ever been in a scenario where you needed money quickly but didn’t have it? In such a case, you can rely on a personal loan. It is a quick and easy way out of your financial problems. However, when you apply for personal loan, you must also be aware of how to manage your personal loan EMI payments.
Keeping track of multiple payments and deadlines while maintaining your monthly expenses can be overwhelming. But don’t worry; you can employ some simple strategies to ensure efficient personal loan repayment while avoiding defaults or late fees.
6 Personal Loan Repayment Tips to Easily Manage EMIs
Check out these 6 personal loan repayment recommendations by experts to assist you in keeping track of your EMIs.
- Determine Your Repayment Capability
Assessing your repayment capacity before applying for a personal loan is critical. Ask yourself: can you afford to make the EMI payments on time every month? Calculate your monthly income and expenses to see how much you can realistically set aside for loan repayments.
And while determining your monthly repayment capacity, don’t forget to account for any unexpected expenses that may arise during the month. Keep a separate buffer for such emergency expenses. By taking all these steps, you can avoid the financial pitfall of unaffordable loans, resulting in penalties and reduced credit scores.
- Set EMI Payment Reminders
Keeping track of your loan personal loan repayment due dates can be a challenge, especially if you have multiple debts to manage. The good news is that you can prevent late payments and avoid incurring extra fees by setting up EMI payment reminders.
Several options are available to help you remember your payment due dates, such as using a calendar, setting an alarm, or downloading a mobile app. With these simple tools, you can rest easy knowing that you won’t miss a payment and can maintain your financial health.
- Plan Your Expenses
It is crucial to budget your expenses to guarantee that you can comfortably manage EMIs. Take a closer look at your monthly income and expenses to identify areas where you can cut costs. Consider reducing your dining-out expenses or cancelling any unused memberships to free up some cash for your loan repayments.
By managing your spending wisely, you can ensure you have the necessary income to make your EMI payments without any financial strain.
- Limit Your EMI to 40-50% of Your Monthly Expenses
One of the most effective repayment tips is to keep your EMI payments within 40-50% of your monthly expenses. This way, you can manage your monthly finance well while repaying your loan. It also helps maintain a healthy balance and ensures you have enough funds for expenses such as rent, bills, and groceries.
Exceeding the 50% mark can make meeting your ends every month challenging. It can increase your financial stress. Therefore, keeping a close eye on your EMI payments and ensuring they align with your budget and financial goals is essential.
- Longer Loan-term vs Interest
A longer repayment period can help lower your monthly EMI payment amount. However, keep in mind that a longer loan term will result in paying more interest over time. Therefore, you must carefully balance a manageable EMI payment and the overall interest paid during the loan period.
You can decide by weighing the pros and cons of a more extended repayment period. Also, don’t forget to check the terms of foreclosing the loan. You may want to exercise this option to avoid paying interest if you get lump sum money in the future.
- Consolidate Your Loans
Managing multiple loans with different repayment schedules and interest rates can be frustrating. If you’re feeling overwhelmed, restructuring or consolidating your loans may be worth considering. With restructuring, you can modify the repayment schedule to suit your needs better.
Consolidation involves combining multiple loans into a single loan with a reduced interest rate. This can make your personal loan EMI more manageable. So, if you want to simplify your finances and reduce your stress levels, restructuring or consolidating your loans may be the way to go!
To summarise, you can easily manage your EMIs and avoid defaults or late fees by following these 6 proven repayment tips. Always prioritise your loan payments, make a budget, and prevent superfluous spending. You may effectively repay your personal loan and reach your financial objectives with a little bit of discipline and dedication.
So go ahead and take control of your finances today!
Author Bio: Tanvi Kaushik specializes in Content Marketing and works with the Digital Team at KreditBee – India’s fastest personal loan platform where self-employed and salaried professionals can easily avail of personal loans in just a few minutes when in need of quick funds. Tanvi writes to-the-point articles on personal finance and budgeting which are truly appreciated by her readers. She is committed to making money matters easy to understand even for the layman. Her commitment to her work doesn’t stop her from pursuing her hobbies of hiking, trekking and going on adventurous trips.