Tips for Better Savings to Pay for Your Personal Loan EMI
A personal loan must be repaid in fixed instalments, called Equated Monthly Instalments (EMIs), over a certain period of time. This feature makes a personal loan highly appealing as it allows a person to plan these monthly payments and choose a loan amount in accordance with their available resources.
To make this decision easier, various websites allow you to use a personal loan EMI calculator to determine the amount of monthly instalment, based on the principle amount and the duration of loan repayment phase. A loan is given on the basis of one’s eligibility for the same, in accordance with their credit score, which could be ascertained using a personal loan eligibility calculator, before applying for a loan.
However, a loan is still an added expense, which must be accounted for in your budget. You could be paying heavily for late payments, as penalties are levied on defaulters that could end up with you losing credibility. It is of vital importance, therefore, that you avoid late EMI payments. Additionally, you should ensure that you have proper resources to meet your obligations. On the other hand, if it is possible to reduce your loan EMI, you are advised to do so. Here are some tips that could help you do so-
Prioritize Repayment of Loans
There are certain borrowings that come with a higher rate of interest. It is advisable to first pay off those loans at the earliest, while trying to repay the minimum amount on the other loans taken at lower interests. This helps you in eliminating the high interest loans, for which you would have otherwise paid on a continual basis.
In the event of coming into unexpected, extra money, using it to prepay the loan fully or partly would go a long way in reducing the cost of the loan in question. While full prepayment completely rids you of the burden of the loan, part prepayment reduces the duration as well as the principle amount of the loan. The shorter duration of an outstanding loan, the lower is the rate of interest it attracts.
Although you might be a loyal customer of a certain bank for many years, and might be getting some great interest rates at this bank, it is always important to not take a hurried decision. You should compare the offers you are getting from other financial institutions and make a sound decision based on what costs you less in the long run. With modern technology, you do not even need to go to these institutions personally; the internet will do it all for you.