With the constant increase in the cost of living, personal loans have started to play an important role in our lives today. Unlike the days when you had to queue in banks for days, nowadays digital loans are disbursed almost instantly. Experts say that while quick access to cash is very convenient, it is important to pay off these loans on time.
Atul Monga, CEO and Co-Founder of BASIC Home Loan, says, âWhile it’s nice to get your mortgage approved quite easily, it’s just as important to pay it off on time. This helps to keep the financial condition of the borrower in good health and also saves time and money in the long run.
With digital advancement, getting a loan has never been easier, but it’s not free money – the borrower has the responsibility to pay the money back on time, especially with interest rates. students. Therefore, if you have more than one loan at a time, pay off the one with the highest interest rate first.
Gaurav Jalan, CEO and founder of pocket, says: âIt is important to keep in mind that the interest rate on a personal loan is much higher than the interest rate on a home loan or mortgage. a vehicle loan. First, pay off loans with a higher interest rate.
Hence, if one has sufficient funds, he / she should consider entering the loan. This will turn out to be a much cheaper option compared to paying full interest over the originally stipulated period.
Here are some tips to pay off the mortgage on time and make it faster;
Make reimbursement a priority – Paying the EMI on time helps to increase the borrower’s credit rating. Scheduling the IME close to the pay date and ensuring sufficient funds will help pay the IME on time. Missing an IME will result in penalties from the lender and also hurt the borrower’s credit rating.
Invest in various programs – âYou can start making different investments to secure the lump sum payment and the loan down payment. If the down payment is large, the loan amount will be less, which would help lower interest rates further, âsays Monga. Lowering the EMI becomes easier for the pockets to pay it back on time.
Negotiate for better rates – There are many tariffs on the market. Experts say you have to negotiate the terms of service with the lender to get the best possible interest rates. Lower interest rates will ease the burden on the borrower and in turn contribute to better repayment.
Choose a short duration – An important factor to consider when taking out a home loan is the length of tenure. The shorter the term of office, the faster the loan assignment will also be. Monga adds, âEven though this will cause the borrower to pay out a larger amount as a NMI each month, the interest rates will be lower. The longer the term, the higher the interest rates.
Even with such metrics, tracking multiple payable IMEs can become difficult. Experts say debt consolidation is another alternative for those with many loans.
Jalan says, âDebt consolidation allows the borrower to consolidate several loans into one. This will allow the borrower to make only one payment each month, with only one associated interest rate. He further adds: âLenders often have attractive offers to consolidate existing loans. This can help the borrower to reduce their overall interest charge, thus making it easier to manage their finances.
Just like debt consolidation, another alternative that one can avail is a personal loan balance transfer. This is basically a process whereby the borrower can transfer all of their outstanding personal loan from one bank to another, and the new bank grants a lower interest rate on the outstanding loan amount. . However, note that to qualify for a personal loan balance transfer, you must have a good credit rating.
Jalan of pocket says, âA good credit rating is just one of the many benefits one would get from paying off loans on time. This will have lasting benefits for the borrower in the long run.