A personal loan can be a lifeline in the event of an emergency or financial crunch. Unlike other types of loans, a personal loan is an unsecured loan, which means there is no requirement for collateral. It requires minimal documentation and has a swift approval process. Although it is straightforward to secure a personal loan, managing your loan EMI’s can be tricky. Planning your personal loan repayment has to be a high priority as failure to honour EMI payments can severely impact your finances in future. Read on as we discuss some helpful tips for personal loan EMI management.
Assess your Repayment Capability
The first thing you need to do to manage your EMI payments efficiently is to assess your loan repayment capability. Make sure to learn the interest rate and repayment flexibility offered by the lender. This information can help you calculate the EMI amount and loan tenure. Most lenders offer online EMI calculators that give a better idea of the EMI that you will have to pay against a personal loan. Choose a term according to your capability to make EMI payments.
Maintain an Emergency Fund
It is advisable to maintain an emergency fund for better financial stability. If any emergency financial situation emerges, you can resort to your savings, allowing you to keep paying your EMIs on time. You can maintain the savings in fixed deposits, gold, or stocks that you can quickly liquidate in case of an emergency.
Go for a Longer Loan Tenure
The EMI amount is inversely proportional to the loan tenure. Choosing longer loan tenure can lower your EMI amount and vice versa. Suppose you think that the EMI amount is more than you can afford to pay monthly. In that case, you can opt for a longer tenure when applying for a personal loan to lower your financial burden in the future.
Maintain a Good CIBIL Score
Maintaining a good credit score helps lenders determine your creditworthiness. Let’s say you have a CIBIL score of 750 and above. In that case, it is easier for you to avail a personal loan at lower interest rates which also lowers your EMIs. Paying your loan EMIs on time can help you maintain a good CIBIL score.
The Bottom Line
Whether you are self-employed or salaried, you can use a small personal loan to solve financial emergencies. If you are looking for a reputable online loan company that extends small personal loans at lucrative interest rates, look no further than KreditBee. We have a fast and simple loan application and disbursal process with minimal paperwork. Just download our loan app, submit your application, and we’ll take care of the rest.