Personal Loan Smart Use: By using personal loan properly, you can reduce your debt, strengthen your financial condition and save money. Know here how to use it in the smartest way…
Personal Loan Strategy: Nowadays, personal loan is no longer just a way to borrow money. If taken wisely, it can help you save and grow your money. The most important thing is that before taking a loan, you should plan carefully and decide why you need it. In this article, know those 5 smart ways by which you can save money from personal loan…
1. Making loans easier
If you have multiple credit card bills, small loans or overdrafts that charge high interest, you can reduce the interest amount by converting them into a personal loan. With only one loan, you will have to pay only one EMI and keeping track of the loan will also become easier. This is called debt consolidation.
2. Pay attention to loan period and interest
Reducing the loan tenure means the EMI will be slightly higher, but the total interest will be less. Therefore, it is important to compare the interest rates, processing fees and other expenses of different banks and institutions. If you are not sure, then choose the right option by consulting a financial expert. This will benefit you in the long term.
3. Take only the necessary amount
Use personal loan only for essential expenses. Like, medical bills, children’s education or home repairs. Taking a loan for comfort or unnecessary expenses can increase additional pressure and debt on you. Along with this, it would also be good to keep an emergency fund of three to six months with you. With this, you will not have to depend on loans again and again for everyday expenses.
4. Making payment before time
If you can pay the EMI intermittently or in part, it will reduce your principal loan amount and also reduce the interest. Apart from this, if your current loan is with high interest, then you can convert it into a loan with low interest. Making a plan to repay the loan early makes your financial life easy and tension free.
5. EMI Auto and Credit Score
Setting up auto debit for EMIs can help you avoid late payments and extra fees. Apart from this, having a good credit score (750+) gives you better interest rates and easy refinancing options.
Disclaimer: This article is for information only. The methods or suggestions given here are not advice for any bank, loan or investment. Before taking a personal loan, definitely consult your bank or financial advisor.
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