A personal loan can assist you to wade through difficult times. It is simple to avail a personal loan too nowadays. However, with it comes to the responsibility of repaying loan EMIs that too on time and in full. Here are some of the crucial tips to assist you to navigate the whole EMI repayment procedure.
Assess your repayment potential –
Take a thorough look at your savings, income, and your prospects well before availing a personal loan. Compute your loan EMIs post considering your personal expenditures. There are numerous online personal loan EMI calculators available in the market today, which you can make use of.
It is crucial to take the personal loan amount based on your necessity only as the loan comes with a high rate of interest. The HDFC personal loan including other lenders has a higher interest rate. For instance, HDFC personal loan interest rate ranges anywhere between 10.50 per cent and 25 per cent per annum. Personal loan even has a shorter repayment tenure and hence the personal loan EMI might take a considerable share of your month-on-month income. Also, review the repayment as well as the part payment linked clauses to make sure that you hold some flexibility in making repayment or closing the loan. Avail the loan only if you simply can service it.
Manage the personal loan EMI –
Your overall personal loan EMI outgo must not be over 35-40 % of your month-on-month income. You might have other credit options, besides a personal loan, thus you must manage your expenditures in a way that the loan EMI is paid in full and on time. Also, this is because personal loans by nature of unsecured and thus among the costliest credit products. So, try and control your month-on-month expenditures and make sure you have an adequate surplus in your account as you wouldn’t want to negatively impact your loan repayment. The cost incurred upon delay in your personal loan EMI repayment is high and you must avoid it. If possible, you must try and prepay a portion of your loan so that your EMI amount is lowered.
Loan repayment tenure –
A longer repayment tenure equates to a lower loan EMI, but a shorter repayment tenure infers the loan is paid off faster. Review if there’s any possibility to change your repayment tenure. This flexibility will assist you to prepay if you hold higher funds or pay a smaller EMI over longer tenure if required. When you avail a personal loan, select a repayment tenure over which you can repay comfortably your loan EMIs. However, ensure to remember that a higher tenure infers you to pay more in the form of interest constituent.
Avoid missing out on EMI –
Late payments or defaults impact your credit score, which has a negative impact on the loan that you may apply for. In the case, you are forgetful and think you will forget to make payment on time, just ensure to set a reminder. It is particularly helpful if you make payment by cheque. Remember you deposit a cheque on a specific date each month.
A personal loan basically is a simple-to-access product but is even among the costliest. Avail a personal loan just if you require to and after considering your income and expenditures. Once you have availed a loan, service it periodically.
Also Check: HDFC Personal Loan Interest Rate
Note that taking up a personal loan is the most affordable solution through which you can excellently manage your financial exigencies and unplanned expenditures. Whether it is medical exigency or planned home renovation, you can avail a personal loan to meet such monetary mismatches. You can avail such loans through the online mode, meaning you can opt for such loans from the comfort of your office and home.
However, even then many tend to hesitate to avail a personal loan. The major reason for this is the high rate of interest and complicated terms and conditions. However, it is a misconception, a personal loan is not a costly affair if you meet the eligibility criteria and have an excellent credit score. The terms involved in such loans are very simple, which makes you thoroughly stress-free for the whole tenure.
Well, the parameters which define your loan eligibility criteria include your age, employment type, your monthly income, your employer, your credit score, your debt to income (DTI) ratio and other liabilities. However, the eligibility parameter differs from one financial institution to another and if you mitigate them, then your loan application would be approved with zero hassles. Mitigating the eligibility parameter of the lender even assists you to get loan approval at affordable and lowest rates. So, if you are facing any financial or monetary crunch and need funds, then availing a low-interest loan can act as a good solution here. But to avail a personal loan at a lower rate of interest, you must follow some parameters –
Disclose all sources of income –
May it be income from a freelancing job or a rented flat, disclosing another income source can assist you avail a personal loan at a lower interest rate. Here, the idea is to lower the credit risk involved to lenders by displaying you have adequate income to make a loan repayment.
Apply with the lender with whom you hold a long-lasting relationship –
Personal loans are provided by a wide range of loan providers, ranging from topmost nationalised lenders to private lenders. To get a prudent deal on personal loan, you must apply with the lender offering an excellent deal. The reason is – you might get a few benefits that you would not get with the new lenders. This is because your prevailing lender as are aware of your income as well as your financial behaviour might be readily convinced that you will make repayment of your personal loan with zero default. Hence, there are chances you might get personal loan approval at lower interest rates.
Including a co-borrower –
Including a co-borrower in your application for a loan not just boost your loan eligibility but even assist you to get better deals at a lower interest rate. So, in the case, your lender permits, ensure to add a co-borrower to your application for a personal loan to make your experience a happy one. However, even if your loan is approved at a lower interest rate, it is crucial to managing it well to avoid the loan repayment burden. Failing on making the loan repayment may not just negatively impact your credit score but also the credit score of your co-borrower. So, be mindful and timely repay the loan outstanding amount.