Personal loans have become a part of most people’s daily lives. Personal loans are the most convenient method to fund your requirements and even occasional pleasures, whether you’re purchasing appliances, going on vacation, establishing a company, or even covering emergency bills.
Obtaining personal loans has become a considerably easier procedure in recent years. For reference, you apply for an Axis Bank personal loan online for up to 25 lakhs with minimum documents.
However, you must know how to return your personal loan swiftly. Smartly planning your payback approach not only helps you save time but also enhances your financial situation.
Start by looking at these 5 easy strategies to pay off your personal loan quickly.
1. Foreclosing the Personal Loan
People frequently use personal loans to cover short-term financial problems. On the other hand, a personal loan has an interest rate and a payback period ranging from 12 to 60 months. As a result, while you could fulfil your immediate financial needs, you are now stuck with a financial burden. You must also repay the loan within 12 months.
If you have adequate funds, the best option is to foreclose on your personal loan. You may do this immediately as your loan’s lock-in term expires. Even if you have to bear the consequences, prepaying your loan saves you a lot of money in interest and significantly reduces your financial stress.
2. Pay off your debt faster with a higher interest rate
Realize that even if you qualify for a personal loan, you’ll pay a greater interest rate than you would on a house loan. Personal loans can be useful in many financial issues but can lead to debt traps if not repaid.
If you already have other loans with lower interest rates, repaying your loan for a much higher interest rate first makes a lot of sense. Emphasizing debt repayment is another wise method to ensure that you pay it off promptly.
3. Debt consolidation loans might help you get out of debt quickly
If you have many debts, including personal loans, you may find it difficult to pay your monthly EMIs on time. A debt consolidation loan is the greatest way to ensure that you do not fall behind on your personal loan payments too often.
With a debt consolidation loan, you may combine all of your loans into a single entity, including credit card obligations. Rather than making numerous payments at different interest rates, this method results in a single monthly payment at a set rate.
In most situations, you will pay a lesser interest rate on your monthly payment with a debt consolidation loan to make it easier to manage your finances better.
4. Obtain a Home Loan Re-finance
Instead of taking out a personal loan, you may take out a home loan money to cover any unexpected home remodelling needs if you already have a house loan. As compared with personal loans and even credit cards, home loans have lower interest rates.
Not only would it help you reduce your debt, but it also lowers your monthly payment. Furthermore, instead of spreading your debt across many lending platforms, you payback for a single loan account.
5. Transferring the balance of a personal loan
If you have got a credit or debit card with a high spending limit or are dissatisfied with your existing lender, you can opt for a personal loan payment plan as a way to pay it off faster. Your prior amount owed is closed under this arrangement. In addition, you could be qualified for a bigger loan amount with a reduced interest rate.
It makes sense if your loan has a higher interest rate and your credit card company provides you with the opportunity to move it to a lower interest rate. However, you may only do this if you have a decent credit score.
Above all, make sure you never lose an EMI payment on the loan.
Choose an auto-debit or ECS payment option most lenders offer and ensure your account has enough balance to repay the interest.
Any missed EMI will result in a penalty, and a lack of adequate money in your account will result in bounce costs, increasing the cost of your loan and affecting your credit score.