personal loan
Summary: Don’t make paying personal loan EMIs a nightmare. Avoid common mistakes and protect your finances with these five helpful tips. Keep your credit score healthy and your budget in check. Manage your personal loan EMIs today! Read on to find out more.
Are you considering a personal loan to meet your immediate financial needs? Personal loans are an easy option to get money quickly for anything from home repairs, educational expenses, or medical emergencies. However, managing your personal loan EMI payments can sometimes be a hassle as it incurs penalties.
Missing or delayed personal loan EMIs can have serious consequences, including a negative impact on your credit score, so with a little effort and discipline, you can repay your loan without any hassle. Now, let’s take a closer look at these tips that will help you manage your personal loan EMI payments perfectly.
Common risks borrowers face when repaying a personal loan
Planning your loan EMIs can avoid potential financial pitfalls. But only some people are interested in this.
Here are five common pitfalls borrowers face while repaying personal loan EMIs and how to avoid them.
· Payment is missing
Many financial institutions generally charge a penalty of 1% to 2% of the late payment amount to encourage timely payment of loan EMIs and maintain payment discipline. To avoid this situation, it is important to have complete control over your personal loan repayment schedule and create automatic payments or reminders to ensure timely payments.
· Interest rate overview
When taking a personal loan, consider the interest rate and its impact on your EMI payments. If you ignore interest rates, you could end up paying more than you borrowed. Therefore, it is important to understand interest rates and their impact on your loan repayment schedule.
Also Read – 6 Tips on How to Get a Personal Loan Without Hassle
· Ignore the prepaid option
Many borrowers are unaware of the benefits of prepayment of EMI loans. Prepayment options can help you reduce the total cost of your loan and shorten your repayment period. However, some borrowers ignore this option, resulting in higher borrowing costs in the long run. To reduce your overall loan costs, it is important to understand and take advantage of the prepayment options available to you.
· Arrears
Late payments can increase the overall cost of your loan and negatively impact your credit score. To avoid late payments, you should set up automatic payments or reminders and ensure you have enough funds in your account to cover your monthly loan payments. For example, IDFC FIRST Bank offers affordable late payment for its loan services, offering up to 2% of outstanding EMI or up to INR 300, whichever is higher.
· Choose a longer period
Many borrowers choose long-term loans to reduce monthly payments. However, this can result in higher interest charges and increase the overall cost of borrowing. As repayment terms become longer, it is important to carefully weigh the pros and cons and choose a repayment schedule that works for you.
· Borrow more than you can afford
Taking on more debt than you can comfortably repay can cause financial stress and even put you at risk of defaulting on your loans. Assess your financial situation before taking out a loan, and only borrow an amount you can comfortably repay. This will help you avoid financial risks, stay within your monthly budget, and maintain a good credit score.
Tips for managing your personal loan payments effectively
Managing your loan EMI payments is important to maintain a good credit score and avoid late payment fees. Here are five useful tips to help you manage your loan EMI payments effectively.
· Understand the Terms of Use
Before applying for a personal loan, read the terms and conditions of the loan. This includes interest rates, repayment terms, processing fees, prepayment options, and other fees associated with the loan. Make sure you know the loan terms and, if necessary, ask your lender for further details.
· Automatic payment settings
Missing or late payments can have a serious impact on your credit score and may even result in fines. To avoid this, consider setting up automatic payments for your personal loan EMIs. Many banks and financial institutions allow monthly installments to be deducted automatically from your account on a specified due date. This will ensure your payments are made on time, thereby reducing the possibility of missed or late payments.
· Consider prepayment/partial payment options.
Many borrowers are unaware of the prepayment/partial payment options available for personal loans. Prepayment allows you to pay back part or all of the loan amount before the end of the loan term. This can reduce your total personal loan interest costs and help you pay off your loan more quickly. However, it is important to understand the prepayment terms and conditions. Some lenders may impose prepayment penalties or set certain limits on the frequency or amount of prepayments allowed.
· Borrow and pay back as much as you can afford
It’s important to evaluate your ability to repay and borrow an amount you can comfortably repay. Don’t borrow more just because you qualify for a higher loan amount. Consider your monthly income, expenses, and other financial obligations before deciding on a loan amount. Borrowing within your ability to repay will help you avoid financial stress and repay your personal loan on time.
· Compare fees and charges from different lenders
Personal loans are subject to various fees and charges such as processing fees, prepayment fees, late payment fees, etc. It is important to compare the fees and charges of several lenders before choosing a loan. For example, IDFC FIRST Bank offers personal loans at affordable fees and charges, including up to 3.49% of the loan amount as processing fee.
Also Read – Manage your money with sustainable personal loans
conclusion
By creating a budget, setting up automatic payments, staying organized, considering prepayment options, and seeking help, you can make your personal loan EMI payments run smoothly and avoid late fees or penalties.
IDFC FIRST BANK offers various EMI options for personal loans with flexible repayment options to suit your needs. You can apply for an instant personal loan in minutes with IDFC FIRST Bank’s hassle-free digital application process. You can also choose to pay EMIs on your loan with flexible repayment terms of up to 60 months and competitive interest rates. Apply and receive now
disclaimer
The contents of this article/infographic/image/video are for informational purposes only. The content is general and for informational purposes only. It is not a substitute for specific advice regarding your particular circumstances. Information may be updated, finalized, reviewed, verified, corrected, and may be materially changed. This information is not intended for distribution or use by anyone in any jurisdiction where such distribution or use would be contrary to law or regulation or which would subject IDFC FIRST BANK or its affiliates to any licensing or registration requirements. IDFC FIRST BANK is not responsible for any direct or indirect loss or liability incurred by readers due to making financial decisions based on the content and information mentioned. Consult a financial advisor before making any financial decisions.
The features, benefits and offers mentioned in the article are valid as of the date this blog was published and are subject to change without notice. The contents of this document are subject to other product-specific terms and conditions and third party terms and conditions, as applicable. Please refer to our website www.idfcfirstbank.com for the latest information.
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