There are times when you need a loan to help you when you need funds. It can be to pay for an unexpected expense or make a significant purchase. Whatever the reason, it’s important to understand how to repay a loan faster so you don’t find yourself in more debt than you can handle.
5 Tips on How to Clear Loan Faster in India
These simple steps will help you stay on top of your loan payments and avoid falling into a debt trap.
- Use Savings to Repay a Loan if it Looks Profitable
If you’ve kept some extra money aside, you may want to consider using that savings to foreclose your loans. This is the easiest way to get rid of debt quickly. Also, it’s a great way to save on interest and become debt-free faster.
However, it would help if you remembered a few things before taking this step. First, make sure that it is actually more profitable to repay your loans quickly. Second, ensure you still have enough money left over for emergencies.
And lastly, decide which loan to foreclose first if you have to repay multiple loans. More on this is coming up in these tips.
- Use Increased Income & Windfall Gains to Repay Debt
Have you recently got some extra money? You may want to go on a shopping spree or take a nice vacation. But if you want to get ahead financially, you may consider using that money to repay your loans.
By clearing your loan faster, you can save a lot of interest and fees. Plus, it will feel great to get rid of that debt! After you clear the loan, you can spend every extra penny you have as you like.
And you don’t need to repay all your debt in one go. You can increase the value of your every EMI. Even a small monthly increase in repayment can make a significant overall difference.
- Prioritize Your Debt
If you have multiple debts to repay, it’s important to prioritize them when you get an income gain, or you feel you can utilize your savings.
Although you might be tempted to repay the loans with the highest interest rates first, there are other factors to consider as well, such as prepayment penalties and tax deductions. You should consider these factors before deciding which debt to clear first.
If you don’t want to brainstorm that much, another simple technique to repay a loan quickly. And that is to pay the biggest debt first and then move on to the next.
- Make Necessary Lifestyle Changes
If it was easy for you to repay your loan quickly, you wouldn’t have taken it in the first place. Thus, it’s clear that you need to make some lifestyle changes or compromises to become debt free quickly. There are many things you can do to free up some extra cash.
First, take a close look at your budget and see where you can cut back on spending. Maybe you can cook at home more often or cancel that gym membership you never use. Any little bit helps!
You should also think about ways to boost your income. Perhaps you can pick up a few extra shifts at work or start freelancing on the side.
- Choose Your Loans Wisely
This is one of the most critical tips to help you quickly repay your loan. Conduct thorough research beforehand! Consider the type of loan you need, how much you need to borrow, and the terms of the loan. Now compare rates and fees from different lenders to shortlist the loan providers that suit your need.
Multiple banks and FinTech companies in India provide instant loans for salaried employees. KreditBee is one such provider of instant online personal loans for salaried individuals. The process is simple and 100% online, with hassle-free documentation. You also get 24*7 customer support and flexible loan tenures.
Let’s recap – Use your savings and windfall incomes to repay your debt faster. Also, remember never to miss an EMI and research before taking a loan. And last but not least, make some changes in your lifestyle to make room for extra cash in your budget to pay more in EMIs.
By following these tips, you can become debt-free faster and have a sound sleep at the end of the day.Author Bio: Tanvi Kaushik specializes in Content Marketing and works with the Digital Team at KreditBee – India’s fastest personal loan platform where self-employed and salaried professionals can easily avail of personal loans in just a few minutes when in need of quick funds. Tanvi writes to-the-point articles on personal finance and budgeting which are truly appreciated by her readers. She is committed to making money matters easy to understand even for the layman. Her commitment to her work doesn’t stop her from pursuing her hobbies of hiking, trekking and going on adventurous trips.