A personal loan is one of the most demanded finance options because of its easy application and versatile usage. Due to the instant approval and disbursal process, this loan type is considered the best during financial emergencies. Applying for and availing of a personal loan is quite easy, but deciding on timely repayment is essential to maintaining a healthy financial standing.
Managing monthly repayment isn’t a cakewalk; it takes a lot of effort since a miss or delay in the payment process can lead to a fall in credit rating. If you find it challenging to pay back the personal loan amount, here are some tips for you to explore.
Create a Detailed Budget
The foremost step in strategising the loan repayment is setting your budget. When you apply for a personal loan, you must be mindful of your exact requirements. Based on your monthly income and expenses, you must track how much you will require and how you will pay monthly instalments.
While creating a budget, you must include your personal loan repayment as a fixed expense and allocate funds accordingly. A thoroughly planned budget will help you to identify the areas where you can cut back on extra expenses and allocate more funds towards your loan repayment.
Prioritise Personal Loan Repayments
Always make personal loan repayments a top priority. Ensure that the instalment due dates align with your payday or other regular income sources. Doing this will ensure avoiding late payments and associated penalties.
Set Up Automatic Debit
Setting up an automatic debit feature will ensure that your monthly instalments get deducted automatically from your bank account without any miss. This automatic feature ensures timely repayment of the loan amount. Moreover, the chances of lenders offering discounts on pre-authorised and automatic payments are usually high, offering you the platform to save considerable amounts on your monthly instalments.
Avoid Skipping Payments
Deliberately skipping personal loan payments can result in significant repercussions, ranging from the imposition of late fees to adverse effects on your credit score. It is crucial to proactively explore alternative solutions before considering the option of skipping payments.
Consider viable alternatives such as refinancing or loan modification when repayment becomes challenging. Refinancing involves negotiating a new loan agreement with more favourable terms, potentially reducing monthly payments, or securing a lower interest rate. On the other hand, loan modification entails adjustments to the existing loan terms, making it more manageable for you.
By actively seeking and implementing these alternatives, you can navigate financial difficulties while safeguarding your creditworthiness.
Consolidate Your Debt
You can consider consolidating debts into a lower-interest personal loan when you have numerous loans with high interest rates. This can streamline repayments and potentially reduce the overall interest burden.
While debt consolidation helps to make the repayment process less complex, you must resort to this option if the interest rate on this loan is lower than the combined interest rate of all the existing loans.
Keep an Eye on Your Account and Credit Score
It is crucial to keep track of your account balance. Moreover, you must remain diligent in overseeing your credit score to ascertain that your loan repayment efforts contribute positively to your creditworthiness. A favourable credit score unlocks financial opportunities and positions you for more advantageous loan terms in subsequent financial endeavours.
By proactively monitoring and managing your credit score, you lay the foundation for a robust financial profile that can pave the way for enhanced borrowing capabilities and improved terms in future.
Pick the Right Account for Monthly Repayment
Setting up an auto-pay feature from a savings account is not a great idea, as the interest you are earning on your savings may not be able to make up for the interest you will be paying on a personal loan.
Alternatively, you can arrange for monthly instalments to be debited directly from your checking account, benefiting from the convenient access to funds in the account.
By incorporating these strategies, you can manage your loan repayments, ensuring financial stability and maintaining a favourable credit profile.
Tata Capital: Your Trusted Financial Partner
Loans are undoubtedly serious financial commitments that must be taken when you are confident enough to pay back the loan amount. With thoughtful planning, you can easily enjoy your life while paying back the loan amount.
Tata Capital personal loans emerge as the most reliable and flexible financial solution tailored to meet diverse needs. With competitive interest rates, hassle-free application processes, and customisable repayment options, Tata Capital stands as a trusted partner in helping you achieve your financial aspirations. The instant and paperless pre-approved personal loan is available for up to ₹1 lakh to make it easy for existing customers to avail themselves of the loan amount.
So, what are you waiting for? Check your loan eligibility and apply for affordable and easily customisable loan tenure from Tata Capital.
