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Smart ways to pay off a personal loan
Posted on Tuesday, March 20th, 2018 | By IndusInd Bank
A loan is an easy way to meet your urgent requirements. Personal loan is widely popular among borrowers as it is an unsecured loan. This means that no specific reason is required to apply for it and the borrowers need not show any collateral to apply for a personal loan. You may apply one for medical, wedding, travel requirements, and even for electronic purchase or to pay off credit card bills.
EMI is an easy way to pay off your debt but sometimes you may skip on paying your monthly payment towards the debt on account of some other financial requirement or emergencies. If you are one of those who sometimes find it difficult to pay the EMI or manage your debts, then consider the following smart ways to pay off your personal loan:
1. Opt for refinance: Refinancing is an ideal way to pay off your personal loan. Loan against property or collateral is lot cheaper than a personal loan. You can save on interest rate and also decrease your EMI amount. Although refinancing can be done after serving the lock in period of 12 month and also involve foreclosure charges, you will benefit in the future for sure.
2. Increase EMI with hike in income: EMI has a direct relation with your monthly income. Before deciding the EMI amount, income and expenses are taken into consideration. As you get a hike in your salary, ensure that you revise your EMI amount to quickly amortize your loan. This way you will not only pay off the loan faster but also save a lot on interest.
3. Use bonus to repay debt: Use windfall gains like yearly bonus, income tax refunds, proceeds of insurance policy, or fixed deposits to pay off your debt.
4. Arrange for extra money: If you find yourself short on cash, you can always look for unconventional ways to earn extra money every month. For instance, you can always opt for selling those unused gowns, dresses or overcoats or even old books on e-commerce sites. Use these extra funds to pay your personal loan without putting too much pressure on your pocket. If you can, opt for part-time jobs and save up extra Rs 5,000 – Rs 10,000 to pay up your personal loan. Although the small amount of Rs 2,000 or Rs 5,000 may not seem like a lot, they definitely add up in the long run.
There are various advantages of paying off your personal loan early, saving interest amount being the main. The money you save can be used in other fruitful ways like buying a good retirement plan, education of your kid, home refurbishing, or family vacations.
Everyone wishes to be debt-free. These smart ways can help you achieve that or at least take you one step closer to becoming debt-free.
