A personal loan is undoubtedly the best way to ease financial stress. We are not necessarily prepared for monetary emergencies always. Neither can we seek help from friends and family right away without hesitation. This is when an online loan comes as a boon. The process of application to disbursal is extremely straightforward. All you have to ensure is a good credit score, correct documents and a steady repayment history. You can repay via pocket-friendly EMIs over a chosen tenure. But borrowers must be mindful of how to manage the loan. This is especially necessary amid an ongoing pandemic to avoid a cash crunch.
A few effective tips can help tackle the personal loan to avoid falling into a debt trap. You will be able to pay back what you have borrowed without hassle. Take a look.
- Increase EMI with Income
You might have saved more money a month, got a bonus or bagged a salary hike. Direct a portion of this extra amount towards your EMI. The more your speed up the payments, the faster you will be able to stir clear of the debt. This can help you close the loan quicker, keep you from paying further interest and help achieve financial independence before time. It can improve your credit profile too which lets you borrow another easy loan in future. But do read the lender’s pre-closure policy beforehand.
- Avoid Delayed Payments
Stay committed to paying EMIs on an online loan app by the stipulated date. This is a good way to avoid penalties and late fees. Or else these might take a hit on your CIBIL score that works against your financial situation. The EMIs can also pile up creating a bigger unmanageable debt. Try to set reminders 2-3 days before the deadline. You can also set up automated payments to remember. These are great habits to ensure timely payments.
- Debt Consolidation
Managing multiple loans on the finance loan app is stressful and time-consuming. Consider taking a single loan that can be used to pay off all ongoing outstanding balances. This way you do not have to worry about different lenders, EMI dates and interest rates. You will only have to track one loan instead of too many of them simultaneously. Simply make a one-time payment to one lender. But make sure the interest rate of the new loan is lower than the combined rates of all the personal loans you are trying to repay.
- Rainy Day Fund
An emergency might derail your financial plan. This makes it extremely difficult to maintain your lifestyle while still being able to pay the EMIs without defaulting. It creates a fixated situation and you end up with a bad credit profile. A good way to prevent this is to start stashing money towards a contingency fund. It can be used as and when required.
- Have a Budget
Keep track of cash outflow and cut down on luxuries. Try to lead a low-key life till the personal loan EMIs are cleared. Check your bank balance often to ensure you are not overspending. There are plenty of online budgeting tools to help manage expenses well. You can upgrade your lifestyle back to normal once the loans are off your shoulder.
Use a finance loan app that lets you check your account status, download statements and
track your loan application. You should also be able to raise a service request and calculate your EMIs through this app. These are also effective ways to manage a loan better.