Easy access to personal finance and online Personal Loans attract many borrowers. Many a time, the need to borrow may not be critical. The borrower might just need the money for a vacation. Whatever be the case, it is necessary to consider the after-effects of taking a Personal Loan. A loan is a big financial responsibility that involves timely repayment. But a financial liability does not have to be a problem if you manage it well. Do you already have a Personal Loan? Perhaps you are planning to take a Personal Loan. Here are five ways in which you can manage the loan.
1. Be Honest With the Lender :
When you apply for a Personal Loan, provide complete and true details to the lender. Giving false information to ensure loan approval could invite difficulties in future. Also, be true to yourself. Be cautious if you already have a lot of debt—especially unsecured debt. Another loan will add to your financial burden. Managing repayments within the specified time can become difficult. So, honesty is the best policy always. It is very important when you are looking to get a Personal Loan.
2. Monitor Your Credit :
Remember to keep a track of all your loans. To manage your loan repayments well, you need to crunch some numbers. You must also do a cost-benefit analysis. Check if repaying or prepaying one loan earlier than the others can save a lot of interest. Or, check the interest you earn on a fixed deposit or other investment. Is it lower than the interest payable on a loan? In that case, divert your funds towards the loan. Monitor your debt situation from time to time. This can help you with your other financial decisions too.
3. Reduce Your Expenses :
Do you want to save money in the long run? Then repaying your loan should be your top priority. Prepare a detailed budget of your monthly expenses and stick to it. Include everything that you can think of. Also remember to add all loans, investments, insurance premiums, and annual expenses. Then, differentiate between what is a must-have and what is good to have. Cut down on unnecessary expenses. Use the money you save to repay your loans. Is impromptu shopping a problem for you? Avoid it by carrying a shopping list every time you go out.
4. Make Timely Payments :
Missing your equated monthly instalments (EMIs) is not an option. Make timely repayment a habit. To avoid missing a payment, set up a direct debit via the Electronic Clearing System (ECS). Set the ECS for a date just after you get your salary. This will help take care of all your financial liabilities in the beginning. The balance money can become your disposable income. In extreme cases, regular repayments might not be possible for you. Meet your lender to see if you can work out an alternative repayment plan.
5. Utilise Windfall Gains :
Got a bonus? Won a lottery? Did a fixed deposit mature? Don’t spend it all. Of course, a lottery and a bonus call for a celebration. But you do not need to be extravagant here. Pay more than the required EMI using the windfall gains. Use any extra income in a productive way. Either invest it or use the money to clear your debt. The sooner you clear your loan, the lower will be your interest outgo. This will result in bigger savings for you.
When you face a sudden financial shortfall, apply for a Personal Loan. But ensure that you have a genuine need for it. Also, check that there is no other way to fund your need. You must also ensure that the loan does not strain your finances. Opt for a Personal Loan only if you are confident that you can repay it. Before you apply though, ensure you check your CIBIL score.
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