Personal Loan is
largely a handful of cash that you borrow out of your lender to improve your
lifestyle. Travelling, indoors of your new home, a newly launched gadget or a
grand wedding ceremony – something that enhance your personal life in any shape
may be financed with smooth non-public loans. Banks
and Non-Banking Finance Corporations provide personal loans in
smooth terms from minimum of ₹50,000 to ₹5,000,000 and more for a selected time
frame. You can avail the mortgage for any private reason like mentioned right
here.
· How to calculate
EMI = P.i.(1+i)^n / {(1+i)^n – 1}
Where,
- P is the Loan Amount (here it is ₹100,000/-)
- i is the Rate of Interest (here it is 14%)
- n is the tenure (that is 12 months)
You definitely need to
calculate the EMI for your loan earlier
than you avail it. If you are a salaried worker you then have a limited incomes
each month, in case you are an entrepreneur then you definitely would possibly have
confronted a no-earning month as well and vice versa. In both case you have got
to test on your each day costs to live. When you're taking a loan you are
promising your lender to pay off that money. So it is vital to get an concept
how much cash outflow will take place each month before you jump into such loan.
The first and the basic step
towards your personal loan
repayment begins with analyzing and calculating the EMI towards your Personal
loan. The very first thing one should do why opting a personal is analyzing the
requirement which includes how much exactly you need. The second thing which
you should do is self-evaluating your capacity to repay the borrowed amount.
One should be very clear about his/her capacity to repay the loan. The
time period in which you can repay the borrowed amount without affecting much
on your daily lifestyle. One can use the Personal Loan EMI
Calculator above to calculate the estimated EMI in advance. Doing this will
provide an idea about your EMI before you borrow. Doing this will also help you
to plan your finances accordingly and manage it in a more efficient way
·
Step-up Repayment
It’s a personal loan
repayment option where a borrower can increase the EMI of their loan with the
increasing tenure period. Step-up repayment option is best suitable for those
borrowers who are confident about an increase in their income in the near
future. People working in private sectors get a good increment with the growing
experience and job switch hence step-up repayment or step- up repayment is favorable
for this group of people as there is a guaranteed increase in income in near
future. Most importantly opting for a step-up repayment save a lot on interest.
This is possible as when the EMI increases the loan ends soon which can save a
lot on the payable EMI.
·
Step-Down Repayment Option
It’s a repayment option where a borrower can
decrease the loan EMI with the increase in the tenure period of the loan. This
option is suitable for those who want to end their loan soon and become
stress-free about the repayments in the future. Individuals who are close to
retirement can opt for this option as with the retirement income reduces.
Hence, being in service is the best time to repay the major part of the loan
when you are earning enough. This repayment option is also suitable for people
who have a good source of income currently and are not sure about a certain
income in the future.
Prepayments and part payments are always
considered good for personal loans. In prepayment you pay the outstanding
amount of your loan to the lender before the due date and close your loan
before the fixed tenure period. This can be done in two ways. Either you pay
the entire outstanding amount in one shot or you can pay the same in equal lump
sum parts, instead of paying in EMIs. But it is important to check before
taking loan from the lender that whether that lender allows prepayments and
part payments or not because if you are planning to do so it is important for
you to know all the terms and conditions before going for it. Many banks charge
some amount as a pre closure charge for pre closing your loan.
Some of the advantage of pre and part payments
are:
- Reduction in the loan tenure and in EMI amount: You can
pre-close your personal loan when you have enough money in your hand which
is more than the outstanding personal loan amount. Pre-paying your
personal loan takes away the burden of the EMIs which otherwise would have
continued for the tenure of the loan.
- Savings in the Interest Paid: When you
prepay your loan, you actually save a lot money which you would have paid
as interest to the lender throughout the tenure. You can use an EMI
Calculator to see for yourself, the amount you would end up saving if you
decide to pre-close your personal loan.
- Increase in the CIBIL Score: As we all know
that CIBIL Score is directly related to our borrowing history. If you are
having a good CIBIL Score that means you are a good borrower and you were
paying your EMIs on time and if you are having a bad CIBIL that means you
were not timely with your EMIs. When you prepay any of your loan it
increases your CIBIL with time as you are debt free which a very good
thing. It gives a positive feedback about you. So in future, if you apply
for a loan with any lender whether it is a bank or an NBFC this will
definitely help you and you can get any loan easily.
- Freedom from Debt: It is not a good thing to be burdened by loans all the time. If there is an option to come out of it, there should not be a second thought. Debt free life not only gives you access to more of your income (as you no longer need to pay EMIs), but also a relaxed mind, which you can then use to plan your budget for investment or buying an asset or whatever you wish to do.
·
Part-payment: How does it
work?
Part repayment does happen in loan markets.
You avail a loan and you know you need to repay the money in a fixed amount. As
mentioned that for an entrepreneur it can be a no-earning month sometimes or
sometimes over-earning month as they don’t have fixed salary date. In that case
if you feel you have enough money to repay a large part of your loan amount
prior to your tenure completion then that can be done easily. If you do so the
tenure of your personal loan will come down and on the other the interest
payment will be less as the interest is calculated on the basis of principal
amount that is left unpaid. You can easily compare and then apply for the
personal loan you need with the help of our EMI Calculator.
Tough time can come in anybody’s life and
financial cash crunch may happen. During this time it becomes difficult to
repay the personal loan. In this case a borrower has two options-
- Go for a Refinance: when you
can't repay your personal loan it may lower your CIBIL and even the
lenders can go for a legal action. To avoid this situation go for a
refinance and take another personal loan to repay the outstanding amount
of your previous personal loan. When you go for a refinance try to search
for a lender you can provide you a personal loan with low interest rate as
compared to that of your first personal loan. In this way you can save a
bit and will also come out from out debt and burden.
- Debt Settlement: when you
are unable to repay your personal loan then debt settlement is an option
to you in which you can request your lender to lessen the outstanding
payable amount. In this way somewhat your burden will reduce and you can
manage to pay off the outstanding negotiated amount.
Dhara Financial services are the leading loan
provider for customers, we provide you unbiased advice while choosing the loan
products.
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