Personal Loan : Taking a personal loan has become quite common these days. Whether it’s for education, wedding, medical expenses, or home repairs, people often take loans for these reasons. But did you know that paying off your loan faster can help you save a lot on interest and improve your credit score as well?
According to financial experts, just paying your EMIs on time isn’t enough. If you receive a bonus, tax refund, or a salary increase, it’s a good idea to use that money to pay off your loan. Additionally, making small extra payments on your EMIs can also help reduce both the time and interest on your loan. Let’s take a look at 5 easy ways you can pay off your personal loan quickly:
1. Pay More When You Can
Try to pay a little more than your regular EMI every month. For instance, if you can pay an extra 2000 or 4000 rupees a month, your loan will get paid off faster and you will pay less interest. Over time, these small extra payments will add up to significant savings.
2. Opt for a Loan Balance Transfer
If the interest rate on your current loan is too high, consider transferring it to a bank or finance company that offers a lower interest rate. This will reduce your monthly EMI and also lower the total interest you have to pay. It’s a smart option, but make sure to consult a financial advisor before making this decision.
3. Use Extra Money to Pay Off the Loan
If you receive a bonus, tax refund, or a salary hike, don’t spend it elsewhere. Instead, use that money to pay down the principal amount of your loan. This will reduce your outstanding debt and the interest you have to pay, helping you pay off the loan faster.
4. Consolidate Multiple Loans into One
If you have several loans, you can consolidate them into a new loan that may offer a lower interest rate. This will not only reduce your total interest but also simplify things by making a single payment each month instead of multiple payments.
5. Talk to Your Bank
If you have been paying your loan on time and your financial record is good, talk to your bank. They might be willing to reduce your interest rate or adjust your EMI. If your loan record is solid, banks are usually open to negotiations.
What Does RBI Say?
The Reserve Bank of India (RBI) has directed banks and financial institutions not to charge any foreclosure fees on loans taken on floating rates. This means that when you pay off your loan early, you won’t be charged any additional fees, making the process even more transparent.
Conclusion
If you want your personal loan to be paid off quickly and save on interest, follow the 5 easy steps mentioned above. By doing this, not only will you pay off your loan faster, but you will also reduce the interest burden and become debt-free sooner.
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