TIPS TO HELP YOU REPAY YOUR PERSONAL LOAN FASTER

Paying off your personal loan quickly can save you money on interest and boost your financial health. Here are expert-backed, up-to-date strategies to help you become debt-free sooner:

1.  Secure the Best Personal Loan Deal

Compare Multiple Lenders: Interest rates on personal loans can vary by 2-6% between lenders. Even a small difference can lead to substantial savings over the loan tenure. Use online platforms to compare rates, processing fees, and customer reviews before finalizing your lender.

Focus on Credit Score: A higher credit score often qualifies you for lower interest rates, reducing your EMI and total interest outgo.

2.  Check Prepayment and Foreclosure Penalties

Review Loan Terms: Before signing, ensure your loan allows partial or full prepayment without hefty penalties. Many lenders still charge prepayment fees, which can range from nil up to 7% of the outstanding principal.

Regulatory Updates: The Reserve Bank of India (RBI) has proposed eliminating prepayment and foreclosure charges on floating-rate loans, which, if implemented, will let you repay your loan early without extra cost.

3.  Use an EMI Calculator

Plan Your Tenure: Use an online EMI calculator to find the shortest tenure you can comfortably afford. Shorter tenures mean higher EMIs but lower total interest paid.

Adjust as Needed: If your income increases, consider raising your EMI to pay off the loan faster and save on interest.

4.  Make a Realistic Budget

Track Expenses: List all income and expenses to identify areas where you can cut back and allocate more funds to loan repayment.

Prioritize Debt: Ensure your EMI payments are non-negotiable in your monthly budget to avoid missed payments and penalties.

5.  Create an Emergency Fund

Financial Cushion: Set aside savings to cover at least 3-6 months of expenses. This ensures you can continue making EMI payments even during unforeseen events, protecting your credit score and avoiding additional interest or penalties.

6.  Make Partial Prepayments

Reduce Principal: Whenever you have surplus funds (bonuses, gifts, etc.), make partial prepayments. This immediately lowers your principal, reducing future interest and the loan tenure.

Check for Charges: Confirm with your lender if partial prepayments are allowed without penalty.

7.  Automate Your EMI Payments

Set Up Auto-Debit: Automating EMIs ensures timely payments, helping you avoid late fees and maintain a strong credit profile.

8.  Consider Loan Consolidation or Refinancing

Lower Interest Burden: If you have multiple loans or find a lender offering a lower rate, consider consolidating or refinancing to reduce your overall interest and simplify repayment.

9.  Use Windfalls Wisely

Lump-Sum Payments: Direct bonuses, tax refunds, or other unexpected income towards your loan to reduce the outstanding balance quickly.

10.  Monitor Regulatory Changes

Stay Updated: RBI’s proposed changes may soon eliminate prepayment penalties on floating-rate loans, making early repayment even more attractive. Stay informed to take advantage of such borrower-friendly policies.