Loans are an effective way in which you can take a certain amount of money in credit from a lender and then repay them at a later point of time. This method of credit allows you to purchase products and items, which you would not have been able to otherwise. However, some things need to be kept in mind while repaying the loan money. These tips will minimize the burden of the payback and allow you to remain stress-free.
1. Prioritize your loans
You may have to repay more than one loan at a time. This can be cumbersome and difficult to manage. However, a good way to go about it would be to prioritise the loans that need to be paid. Pay the highest loans first and the smallest loan at the end. This practice ensures that the interest rate on your loans improves going forward. Try to clear off as much of the big loan as possible, without jeopardising the repayment of the smaller loans.
2. Increase payments with rise in income
Since taking the loan, you may have undergone a promotion in the workplace or growth in your business. This usually means that your annual income is bound to increase. It is important to increase the EMIs for the loan along with the increase in income. This will aid you in the long term, by reducing the interest that you have to pay by the end of the loan repayment term.
3. Use extra income for debt payment
Most people make the mistake of spending their bonuses and extra income in other places rather than using the same to pay a portion of the debt. Remember that as long as your loan repayment period continues, you are essentially paying a significant amount of interest on the same. Most loans can also be pre-paid, in order to reduce the burden.
4. Clear credit card dues as EMIs
Credit cards act as instant loan option, which you can pay back within 50 days of the expenditure. However, most companies charge around 3-3.6% interest on the amount outstanding. This means that you may have to pay an interest of around 36% to 44% in a year. Paying such an amount may prove difficult, which is why it is recommended that you pay credit card debt through EMIs. Talk to your credit card company for help regarding this matter.
5. Use income from existing investments to repay debt
If you have invested your money, use the interest rate from the same to pay for the loans that you have taken. The interest on your investment is an extra income that should be utilized for repayment of loans.
Follow these tips to ensure that you can repay the loans in a simplified and stress-free procedure.
1. Prioritize your loans
You may have to repay more than one loan at a time. This can be cumbersome and difficult to manage. However, a good way to go about it would be to prioritise the loans that need to be paid. Pay the highest loans first and the smallest loan at the end. This practice ensures that the interest rate on your loans improves going forward. Try to clear off as much of the big loan as possible, without jeopardising the repayment of the smaller loans.
2. Increase payments with rise in income
Since taking the loan, you may have undergone a promotion in the workplace or growth in your business. This usually means that your annual income is bound to increase. It is important to increase the EMIs for the loan along with the increase in income. This will aid you in the long term, by reducing the interest that you have to pay by the end of the loan repayment term.
3. Use extra income for debt payment
Most people make the mistake of spending their bonuses and extra income in other places rather than using the same to pay a portion of the debt. Remember that as long as your loan repayment period continues, you are essentially paying a significant amount of interest on the same. Most loans can also be pre-paid, in order to reduce the burden.
4. Clear credit card dues as EMIs
Credit cards act as instant loan option, which you can pay back within 50 days of the expenditure. However, most companies charge around 3-3.6% interest on the amount outstanding. This means that you may have to pay an interest of around 36% to 44% in a year. Paying such an amount may prove difficult, which is why it is recommended that you pay credit card debt through EMIs. Talk to your credit card company for help regarding this matter.
5. Use income from existing investments to repay debt
If you have invested your money, use the interest rate from the same to pay for the loans that you have taken. The interest on your investment is an extra income that should be utilized for repayment of loans.
Follow these tips to ensure that you can repay the loans in a simplified and stress-free procedure.
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