5 Practical Tips To Manage Your EMIs
Taking a personal loan at a time of financial crisis or an emergency is now made easier. With everything happening online, it also helps you save on time and money. But managing the EMIs can sometimes take a toll on your mental health. Here are 5 tips that can help you in balancing your EMIs efficiently.
1. Create Separate Funds For EMIs
Creating a separate fund dedicated to your personal loan EMIs ensures timely repayments even during unforeseen financial emergencies. Open a separate account for your savings. Never use this account for anything else but your EMI payments. Always maintain these funds as they will help you manage your loan and its payments smoothly and efficiently.
2. Opt For Debt Consolidation
If you are paying EMIs for several small and big loans at a time, you must be finding it difficult to remember each loan’s EMI date and you may end up missing your payments from time to time. In such a situation, taking a personal loan for debt consolidation can be an ideal option. In this process, you take one loan to pay off all your old debts and now pay EMIs only for the new loan you took last. The biggest advantage is that you no longer need to deal with several lenders and your focus is shifted to one single loan only. So, you end up managing your payments better.
3. Increase Your Emi Amount If Possible
Many NBFCs offer flexible repayment terms that you can use at your convenience. If you have got a salary hike or joined a part-time job, you can spend the increased earning towards paying off your loan faster. You can request your lender to increase your EMI amount so that you can pay off the loan quickly and become debt-free. However, if you are finding it difficult to manage your EMIs, you can request the lender to increase the number of your EMIs and reduce their EMIs to make them easily manageable.
4. Repay High-Interest Loans First
Make a list of your debts according to the interest rates. A Home Loan or Student Loan is likely to have lower interest rates while offering tax benefits. Also, the value of a home will appreciate over time. Credit Card debts and Personal Loans, on the other hand, tend to come with slightly higher rates of interest. It is, therefore, a good idea to pay these before moving on to ‘safer’ ones.
5. Create A Contingency Fund
Regardless of how well you plan your expenses, eventualities may occur. Failing to pay your housing loan EMIs for even a month can make you a defaulter and hurt your credit score. Therefore, maintain a contingency fund that can cover at least three EMIs in a row if an emergency were to occur. Ideally, you should start building this fund in small installments as soon as your loan is approved.
Personal loans can be the best means to fulfill your dreams. Use the tips mentioned above to make your EMI payments more manageable, as a result of which your financial well-being becomes stress-free.