A personal loan is an obvious choice if you need finance for Personal finance, Medical emergency, Wedding purposes, Abroad travel, Holidays, Child education, and for buying consumer durable things.
A personal loan is one of the most significant liabilities; you must adjust your assets to be able to repay them on time without having to make a lump-sum payment. However, while this could be stressful for your finances, there are ways to reduce your loan burden without causing undue stress.
Prepaying your loans is not a daunting job if you prepare ahead of time. If you collect money from other sources or produce extra funds. You can use them to pre-pay your loan, which will relieve you of the pressure of making regular payments while also saving you money on interest.
If you have a lot of loans or credit card payments and pay a lot of EMIs, you must be taking out a lot of money for repayment. To alleviate the problem and lower your EMIs, you should apply for a personal loan for debt restructuring and pay off all of your debts with a single EMI.
If you already have a home or personal loan from a bank, you can apply for a top-up loan. If you have a decent credit score or repayment history, you can use the top-up facility to repay your current debts at a lower interest rate.
If your debt-to-income ratio has risen substantially, you can cut down on most luxuries, such as entertainment and media subscriptions, in addition to avoiding all credit cards.
Your savings serve as a safety net in the event of a financial emergency; you can liquidate your investments or take out a loan against them to repay your loan. The interest paid on a loan is significantly higher than the interest paid on fixed-income portfolios. However, this is a drastic step that can only be taken in an emergency.
For millions of people, owning a house is a dream come true. However, before booking a home, it is advisable to devise a strategy for reducing your burden when repaying your home loan. The EMI, the rate of interest (ROI), and the tenure all play important roles in home loan repayment. If these are not considered, a borrower will face an unfair repayment burden. Here are three strategies for reducing home loan debt for first-time buyers.
Prepayment is an easy way to reduce the burden of a home loan. Borrowers of home loans will save interest if prepayment starts in the first year of the loan. Prepaying a home loan at a later point does not save much interest. It should be remembered that there are no prepayment penalties on home loans with floating interest rates. Furthermore, the prepayment number should be equal to at least two EMIs.
Pay a greater down payment – The Reserve Bank of India determines the minimum percentage of down payment needed to secure a loan. The interest rate is then measured as a percentage of the amount that remains. As a result, putting down more money upfront would result in a lower EMI to be paid in subsequent years.
Make the payments on time. Before you agree to a home loan, you should be aware of its implications. Failure to pay the dues on time can only contribute to bigger issues in the future. The principal sum can remain the same, but interest may continue to accrue throughout periods of nonpayment. So, if you can maintain a lower rate of interest paid on the principal amount of the loan, it is a good practice to make daily payments or even pre-payments.
