When you are planning to take a personal loan, A lot of things would come into your mind. How you are going to repay the loan amount? What will be the rate of interest from a lender and other details?
However even before you take a loan, you should research about the lender, the eligibility criteria, required documents. To check eligibility, you could use the personal loan eligibility calculator. Similar to this, there are a lot of things to do. First, we will focus on spending better.
Do you have a budget to spend ?
A borrower is independent to use the loan amount for any purposes it seems fit. However, when you have apply, it is better to create a budget to know where you will spend the money. For example if you are taking the loan to do a wedding shopping, make sure to spend it only on the wedding shopping. Otherwise even before you realise, the money has been spent on something else, and you still have to arrange funds to do the shopping.
Same thing could be applied when you have to repay the loan. You must create a budget to see how you could save money to repay the loan. Doing budgeting will give you an idea when the unnecessary spending are happenings to stop it.
What is the date for payment?
When you are making the late payment for the personal loan, there are severe consequences for it. The first thing will happen that it affects the Credit report. The CIBIL score goes down making harder to get personal loan quickly next time.
Other than this, every lender will charge late payment fee the delayed repayment. Since the loan is unsecured, the charges are higher comparing to a secure loan.
HDFC charges 1% to 2% of the loan amount for late payment.
ICICI bank charges 24% P.A on the late payment.
Kotak Mahindra Charges Rs 300 on the late payment.
SBI charge 2% on the late payment.
PNB charges 2% above the normal interest rate for late payment.
So, we can see, how the lenders charges a high amount for late repayment. This is why you should not miss the date.
Do you want to consolidate debt?
If you have taken multiple personal loan and maybe consolidating debt would be good option for you. It means, you combine every loan into one single payment with a lower interest rate. However, the issue here is to get the best deal.
Getting the best deal depends upon your creditworthiness. If the credit report is poor, a lender might not be willing to do it. But if it is good, then definitely the chances are very good. One more thing, do not use the personal loan for consolidate debt if currently you do not have high income. It is merely restructuring the debt, not repaying it.
Lenders such as IDFC first bank, Bajaj Finserv, MoneyTap, FairCent, HDFC bank and Fullerton India offer customized personal loan for debt consolidation.
How you are repaying it?
So, this is something to do with how you are paying the loan back. There are a couple of way. You deposit cheque, make an online payment or offer cash. However, if you can do it, set an Autopay to the loan.
When you set it on autopay, first you are never late for payment saving the late payment charges. And second it helps to build a good credit.
Conclusion
So, these are few tips on how to repay the loan better and manage it better. Hope these tips will help you out. And do not sign the loan papers before you read it from cover to cover.