Synopsis:Don’t let personal loan EMI payments turn into an issue. By following these five strategies, you can avoid the common mistakes and remain on top of your financial situation. Maintain a healthy credit score and budget under control. Take charge on your own personal loans EMI now! Learn more about the process here.
Are you thinking about getting a personal loan to cover your financial demands in the moment? Personal loans are an excellent alternative for quick cash for home improvement projects or education costs medical emergencies, any other. However the management of personal loans EMI payments can be difficult once they are approved.
If you are in a position where you’re late or not paying the repayment of your loan EMIs could result in serious consequences and a negative impact of your credit report, it is possible to are able to pay back your loan in a matter of minutes by exerting a small amount of determination and discipline. So, let’s take a dive and discover these suggestions to ensure you are on track with the personal loans EMI payments.
Common pitfalls borrowers face during personal loan EMI payment
Making a plan for your loan EMIs will help in making sure you avoid financial disasters. Only a handful of people are aware of this.
Here are five common traps that consumers face when making personal EMI loans and the best ways to avoid them
* Payments not made
A lot of financial institutions will typically charge a penalty of between 1% and percent of the delinquent payment amount to make it easier for loans EMI payments and to maintain payments in a disciplined manner. Keep up-to-date with your personal loan’s payment schedule and setting up automated payments and reminders for timely payments is essential to avoid the possibility of this happening.
“Overlooking” interest rate
If you are taking out personal loans, take note of what the rate of interest is and consider how this will affect the monthly EMI payment. If you do not pay attention to your interest rates, you might be paying more than what you borrowed. So, it’s important to be aware of the rate of interest and how it affects the repayment plan for your loan.
Also, read six tips for getting a personal loan without trouble
* Disregarding the prepayment option
Many borrowers are not aware about the benefits of paying their loan in advance EMI. Prepayment options can cut down on the total cost of the loan, and also reduce the time to repay. But, many borrowers do not consider this option, which results in more expensive loan rates in the end. It’s important to be aware of the different options available to you for prepayment and make use of these to lower the overall cost of your loan.
* Late payment
In the event of late payments, they can raise the cost of your loan, and affect your credit score adversely. To avoid the risk of late payments, create auto-pay or reminders for your payments and ensure that you have enough funds on your bank account in order to pay for your amount of the loan EMI payment. For example, IDFC FIRST Bank provides reasonable late fee charges for loans, which includes the option of 2 percent of the outstanding EMI and in the case of INR 300, whichever is greater.
* Opting for longer tenure
Many loan applicants opt for an extended term to cut down on the amount of month-to-month EMI payments. But, this could lead to higher interest rates and can increase the overall price of the loan. It is crucial to consider the advantages and disadvantages of a more time and select the repayment schedule that is suitable for you the best.
* If you borrow more than you are able to manage to
In addition, taking to take on more credit than you could easily pay back can cause financial strain and the possibility of loan default. Before you apply for a loan, consider your financial situation and only take out the amount you are able to pay off easily. This will allow you to stay clear of financial problems, stay within your budget each month and maintain a strong credit score.
Tips to manage you personal loan EMI payments efficiently
The management of your loans EMI payments is essential for maintaining a good credit score as well as avoiding penalties for late payments. Here are five strategies to effectively manage all of your loan’s EMI paymentseffectively and efficiently.
* Be aware of what the conditions and terms are.
Before submitting an application for a personal loan, you must read the conditions and terms for the loan. This includes the rate of interest and repayment time and processing fees, the option to prepay, and any other fees associated in the loans. Make sure you are aware of the terms and conditions of the loan and request from your lender any clarifications in the event of need.
* Automate payment
In the event of a late payment or missed payments, it could have serious implications on your credit score. It could result in penalties. Make sure you set automated payments to your credit card EMI to stay clear of this. A lot of banks and financial institutions permit them to automatically subtract your EMI payment from your bank account at the date that is scheduled for due. This will ensure that your payments are paid on time, decreasing the chance of not making payments or making late payments.
* Think about pre-payment or part-payment options.
Many borrowers aren’t aware of the options for prepayment or part-payment in personal loans. Prepayment lets you pay back only a fraction or all of the amount of the loan prior to the expiration of the loan term. It can lower the total interest costs and pay back the loan more quickly. It is important to know the details and the conditions. Some lenders might apply penalties for prepayments or specific restrictions on the frequency and amount of prepayments allowed.
* Borrow whatever you can afford, and then repay
It is important to evaluate your ability to repay and only limit your borrowing to what you are able to repay easily. Do not take on more debt simply because you’re in a position to get a bigger loan amount. Be aware of what your income and expenses are each month and other financial obligations prior to making a decision on the amount of loan. Being able to repay the loan within your capacity can help you to avoid financial burden and ensure prompt payment on your loan EMI.
* Compare charges and fees from various lenders
Personal loans are accompanied by a variety of expenses and costs, including processing fees, prepayment fees late payment fees and so on. The comparison of these charges and fees of different lenders is crucial when deciding on the best loan. For example IDFC FIRST Bank offers personal loans that have reasonable charges and fees, which include up to 3.49 percent of the loan as processing charges.
Also, check out – How to manage your finances by taking on the ongoing use of a Personal Loan
Conclusion
Through establishing a budget and setting up automatic payments and staying organized, evaluating ways to pay in advance, and seeking help to remain on track with any individual credit EMI payments and stay clear of penalties or late fees.
IDFC FIRST Bank offers a selection of personal loan EMI options that offer flexible repayment options that meet your needs. IDFC FIRST Bank’s easy online application process allows customers access to personal loans in just a few only a few minutes. You can also select flexible repayment terms of up to 60 month and loans with EMI installments with attractive rates of interest. Apply today and get
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