Want to close your personal loan early? These 5 tips can help you save big
Personal loans are convenient in emergencies, but the longer you keep them, the more you pay in interest. The plus side is that with some clever strategies, you can reduce your loan term and save on the total cost. If you want to access monthly cash flow or eliminate debt anxiety, prepayment of your loan can be a clever money move.
Paying off your personal loan early has big benefits A personal loan can provide immediate financial solace, but with monthly EMIs and interest charges as well. Paying the loan in advance will lighten your load and save you interest. Whether a short-term loan or a long-term loan, the proper methods can literally perform miracles. Below are five easy tips to repay your personal loan in advance.
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Tip 1: Pay more whenever possible
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Tip 2: Increase your EMI amount gradually With increasing earnings, you can increase your EMI amount. A small added amount every month will result in a gigantic cut in the repayment duration and interest expenditure. You can change EMIs throughout the loan tenure with the lenders. Compute through online EMI calculators how different amounts cut down the repayment tenure. This strategy is going to be optimum if your cash inflow is predictable and constant.
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Tip 3: Opt for a shorter loan term when you start While longer tenors do save you monthly EMI, at the cost of paying more interest overall. If you don't have a problem with paying bigger EMIs, choose a smaller duration for the loan while taking the loan. Not only does this save you cost overall, but also ensures prepayment of debt. It's best suited for individuals having sound fiscal discipline and regular income.
Tip 4: Avoid skipping or delaying EMIs Paying your EMIs on time keeps your loan in check. Missing just one EMI will lead to penalties, hit your credit score, and increase the tenure of your loan. Arrange auto-debit instructions or reminders to avoid missing payments. Having a clean record of repayment also increases your chances of getting future loans at lower rates.
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A few savvy steps can result in significant savings Premature repayment of your personal loan does not necessarily involve drastic measures—all it requires is more intelligent planning. Paying extra, increasing tenures, choosing shorter tenures, and self-discipline can make you thousands lighter and debt-free sooner. Incorporate these methods now to make your financial future a little smoother.
