6 Ways to Manage Personal Loan Repayments
5 min read | 2 months ago
Managing personal loan repayments often feels like balancing on a tightrope. You have your monthly expenses, unexpected costs pop up, and sometimes, those due dates slip your mind. The good news is that with a few simple strategies, you can gain control over your repayments and ease that financial burden. This guide takes you through the strategies to help you out.
What are loan repayments?
Loan repayments are the payments borrowers make to settle the debt they owe to a lender. These typically cover the principal amount, i.e., original loan and interest, which is the cost of borrowing. EMI or Equated Monthly Instalment is the most popular loan repayment method.
With EMIs, borrowers make fixed monthly payments that cover both the principal and interest, allowing them to plan their finances with predictable payments throughout the loan term. This method is widely used for personal loans, mortgages and more, offering simplicity and consistency in repayment schedules.
Strategies to be regular with your personal loan repayments
The following are some steps to help you manage your repayments smoothly and avoid the stress of falling behind:
1.Pick an affordable EMI
Before taking a loan, evaluate your finances and pick an EMI that fits your budget. For example, if your monthly income is ₹50,000, committing ₹15,000 towards EMI might stretch your finances too thin. Instead, choose an EMI that allows you to meet other financial obligations comfortably. By opting for a manageable EMI, you reduce the risk of defaulting and ensure your repayments won’t impact your lifestyle or savings plans.
2.Stick to a payment routine
It’s easy to get tempted and spend the EMI amount on other things. To avoid this, set aside the necessary funds as soon as you receive your income. For instance, if your EMI is due on the 15th, make it a habit to reserve that amount on the 1st. This way, you are prepared for the payment, reducing the temptation to use those funds elsewhere.
3.Set automatic payments
Automating your loan payments is a simple way to stay on top of your dues. Most banks allow auto-debit from your account, ensuring payments are made on time. For example, if your salary is credited on the 5th, set up an automatic transfer to handle the EMI on the 6th. This removes the hassle of remembering due dates and gives you peace of mind, knowing you’re consistently making timely payments.
4.Address missed payments on priority
If you miss a payment, clear it as soon as possible to avoid late fees and accumulating interest. For instance, if unexpected expenses cause a delay, try to cover the missed EMI in the next month to prevent falling further behind. Additionally, if you ever feel stretched, contact your lender. They might offer solutions like loan consolidation or a temporary reduction in EMI, which can help you manage your repayments better in the long run.
5.Consolidate multiple loans
If you have several loans, consolidating them into one can simplify your repayments. This way, you manage a single payment with potentially lower interest rates, making it easier to keep track and reduce overall costs.
6.Make prepayments when possible
Making a partial prepayment can reduce your outstanding principal, which in turn lowers the interest. If you have extra funds, consider using them to pay down the loan early. Even small prepayments can shorten the loan term and save on interest.
Secure a personal loan with flexible repayment options today
Securing a personal loan with flexible repayment options can make managing your finances much easier. Unity Small Finance Bank offers personal loans with a variety of terms to suit your needs. We provide flexible EMIs and attractive interest rates, allowing you to customise your repayment schedule. Take control of your finances today and experience a hassle-free way to manage your personal loan on your terms. Apply now to discover how easy and convenient personal loan management can be with us.
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
