Making on-time personal loan repayments will help you improve your credit rating and manage your money. To learn some clever strategies for slightly simplifying loan payments, continue reading.
With the rapid rising of living costs and unexpected expenses becoming more frequent, personal loans have become essential financial aid for a great number of people. Standing in line for hours to apply for a personal loan is no longer necessary. Loan availability has improved with digitalization. Almost all banks and NBFCs now offer personal loans online.
Although having such quick access to loans is advantageous, it’s crucial to use them sensibly. Personal loans can assist you if you accept them carefully and have a well-thought-out plan to return them on schedule.
However, personal loans can easily put you in a debt trap if you miss your EMI payments.
As a result, it’s crucial to have a well-thought-out plan for timely loan repayment. Let’s focus on a few beneficial suggestions.
The Best Personal Loan Offers in 2024
| Loan Provider | R.O.I | Processing Fees | Loan Amount | Cibil Score |
| Paysense Personal Loan | 18% – 22% (Reducing Per Annum) | 2% – 5% | 50.00 k – 10.00 Lacs | 700 |
| Werize Personal Loan | 15% – 22% (Flat Per Annum) | 3% – 5% | 30.00 k – 5.00 Lacs | 650 |
| Money View Personal Loan | 17% – 36% (Reducing Per Annum) | 1% – 5% | 5.00 k – 5.00 Lacs | 650 |
| IDFC Bank Personal Loan | 10.49% – 22% (Reducing Per Annum) | 1% – 4% | 1.00 Lacs – 40.00 Lacs | 700 |
| Incred Personal Loan | 16% – 33% (Reducing Per Annum) | 1% – 5% | 50.00 k – 10.00 Lacs | 650 |
| Aditya Birla Personal Loan | 12% – 28% (Reducing Per Annum) | 1% – 4% | 1.00 Lacs – 50.00 Lacs | 650 |
| Finnable Personal Loan | 16.95% – 30% (Reducing Per Annum) | 1% – 5% | 50.00 k – 10.00 Lacs | 700 |
| Hero Fincorp Personal Loan | 9.5% – 16% (Flat Per Annum) | 1% – 5% | 50.00 k – 10.00 Lacs | 700 |
| Muthoot Finance Personal Loan | 14% – 22% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 7.50 Lacs | 685 |
| Upward Fintech Personal Loan | 18% – 32% (Reducing Per Annum) | 2% – 5% | 25.00 k – 5.00 Lacs | 650 |
| Cashe Personal Loan | 1.5% – 3% (Fixed Monthly) | 1.5% – 2% | 10.00 k – 4.00 Lacs | 550 |
| Finzy Personal Loan | 10.99% – 18.99% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 10.00 Lacs | N/A |
| Fibe Personal Loan | 15% – 30% (Reducing Per Annum) | 1% – 2% | 8.00 k – 2.00 Lacs | 550 |
| Faircent Personal Loan | 25% – 30% (Reducing Per Annum) | 7% – 9% | 50.00 k – 10.00 Lacs | 700 |
| Stashfin Personal Loan | 2.45% – 4% (Fixed Monthly) | 2% – 2% | 5.00 k – 5.00 Lacs | 725 |
| Tata Capital Personal Loan | 10.5% – 14.25% (Reducing Per Annum) | 0.75% – 2% | 75.00 k – 25.00 Lacs | 720 |
| Standard Chartered Bank Loan | 11.49% – 20% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 1.00 cr | 740 |
| Bajaj Finserve Personal Loan | 13.5% – 15% (Reducing Per Annum) | 0.5% – 1.5% | 1.00 Lacs – 35.00 Lacs | N/A |
| Axis Bank Personal Loan | 11.15% – 16.25% (Reducing Per Annum) | 1% – 4% | 1.00 Lacs – 40.00 Lacs | 690 |
| ICICI Bank Personal Loan | 10.5% – 15% (Reducing Per Annum) | 0.5% – 1.5% | 1.00 Lacs – 1.00 cr | 700 |
| Fullerton Personal Loan | 14% – 32% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 25.00 Lacs | 705 |
| HDFC Bank Personal Loan | 10.25% – 16% (Reducing Per Annum) | 0.5% – 1.5% | 1.00 Lacs – 1.00 cr | 700 |
| Shubh Life Personal Loan | 28% – 44% (Reducing Per Annum) | 1% – 3% | 5.00 k – 2.00 Lacs | 650 |
| Loan Tap Personal Loan | 11% – 24% (Reducing Per Annum) | 1% – 2% | 50.00 k – 7.00 Lacs | N/A |
| KreditBee Personal Loan | 1.5% – 3% (Fixed Monthly) | 5% – 6% | 1.00 k – 3.00 Lacs | 550 |
| FlexSalary Personal Loan | 1.5% – 3% (Fixed Monthly) | 300% – 750% | 4.00 k – 2.00 Lacs | 550 |
| Mpokket Instant Loan | 2% – 4% (Fixed Monthly) | 50% – 200% | 500 – 30.00 k | 550 |
| MoneyWide Personal Loan | 17% – 24% (Reducing Per Annum) | 1% – 3% | 10.00 k – 3.00 Lacs | 650 |
| Insta Money Personal Loan | 13% – 36% (Reducing Per Annum) | 1% – 4% | 5.00 k – 25.00 k | 650 |
| Kotak Bank Personal Loan | 10.75% – 22% (Reducing Per Annum) | 0.75% – 2.5% | 1.00 Lacs – 50.00 Lacs | N/A |
| Cholamandalam Personal Loan | 14% – 22% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 35.00 Lacs | 675 |
| SBM Personal Loan | 14% – 20% (Reducing Per Annum) | 1% – 4% | 50.00 k – 25.00 Lacs | 700 |
| Axis Finance Personal Loan | 14% – 16% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 50.00 Lacs | 650 |
| Shri Ram Finance Personal Loan | 13% – 16% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 25.00 Lacs | 680 |
| One Tap Loan Personal Loan | 24% – 36% (Reducing Per Annum) | 2% – 5% | 50.00 k – 5.00 Lacs | 650 |
| Credset Personal Loan | 18% – 30% (Reducing Per Annum) | 3% – 5% | 50.00 k – 5.00 Lacs | N/A |
- 1. Make the Repayment of Personal Loans a Priority
Paying back loans is a top priority before you even qualify for a personal loan. Make sure your EMI payment is made in close proximity to the day you get paid. Prioritizing the payment of your EMI over all other bills will assist you. If not, consider setting up a separate reserve to guarantee that there is always enough money to cover the EMIs.
- 2. Opt for Consolidation of Debt
Consolidation of debts can be the ideal choice for you if you struggle to make your EMI payments on time and you have many loans. For example, you can choose to consolidate your debt with a single personal loan if you have a lot of credit card debt. Additionally, the interest rate on a personal loan is typically lower than that on a credit card.
It lowers the overall expense of debt and aids in controlling the loan repayment procedure. All things considered, it is an economical method of paying back personal loans.
- Choose the Personal Loan Balance Transfer Option
If you’re paying off a high interest rate and high monthly payments (EMIs) on a personal loan, you can transfer the balance. You can transfer your loans at a reduced interest rate by choosing to opt for a personal loan balance transfer. In addition, you have the option to lengthen the loan term, which would significantly lower your EMI. Repaying your loan may become somewhat simpler for you as a result. Conversely, if you have the means to pay it, choose a balance transfer option along with a shorter loan term to make sure your loan pays off soon.
- Conclude the Personal Loan Earlier
If you have enough money, try paying back your personal loan in installments. In addition to the EMIs, any partial payments you make go toward the main balance of your loan. As a result, the principal gets smaller. The interest amount also does this. By choosing to foreclose on the personal loan, you can pay it off faster and eventually make it more affordable. Furthermore, if you repay before the agreed-upon term, you can be charged foreclosure fees.
- 5. Refrain from Skipping Payments
Certain lenders might let you skip a payment if you’re having financial difficulties. Doing so can lengthen the loan’s term and raise the total amount of interest you pay. It is imperative that those experiencing financial difficulties adhere to a regular payment schedule and investigate other possibilities, such as a loan restructuring or postponement.
The Following Strategies Will Help You Pay Off Your Personal Loan Faster and With Less Interest:
- Make Payments That Are Greater than the Bare Minimum Needed: Every little bit helps! The overall amount of interest paid can be significantly reduced, and the loan repayment period can be shortened, even with a modest monthly addition.
- Make Payments More often than Necessary: Biweekly payments are accepted by some lenders. This speeds up the repayment method by increasing the frequency of the repayments throughout the course of the year.
- Make a One-time Payment or Pay Off the Loan Early: If you happen to get additional money, consider applying it to the principal of your loan. This immediately lowers your debt due, which leads to a quicker payback and lower interest costs.
- Cut Costs to Free Up More Money for Loan Repayment: Look over your spending plan and identify expenses where you may cut back. To expedite the loan payback process, apply these savings toward your loan installments.
- Pay attention to Your Choices for Balance Transfers or Refinancing: Think about refinancing with a new lender that provides a lower rate if you’re carrying a high interest personal loan. This may shorten the repayment period and significantly lower your interest costs.
- Stay Away from Bringing in New Debt: Do not take on new debt while you are repaying your personal loan. If you do this, repayments on loans will be hampered, and your ultimate monetary obligations will increase.
What is the Pre-closure Penalty Related to Early Personal Loan Payback?
A number of banks charge a prepayment penalty for early loan payback. This penalty is usually expressed as a percentage of the remaining loan balance or the interest that the lender would forfeit if the loan were repaid early. Prepayment penalties usually range from 2% to 5% of the total loan amount. The exact amount may vary, depending on the lender.
What Advantages Come with Repaying Your Personal Loan Early?
The main advantage is the reduction of interest costs. You can lower the overall interest paid by paying off the loan debt sooner. Furthermore, you pay off debt faster, which gives you peace of mind and extra money for other goals. Your credit score may benefit from consistently making on-time payments and loan payoffs early.
Five Benefits of Paying Back Your Loan Earlier
The following list includes the top 5 benefits of early loan repayment:
- Avoid paying interest on your loan.
- Better budgetary planning.
- A rise in the credit score.
- Lower worry.
- Stay away from late fees for late payments.
How Can Early Payback Help You Save Money Over Time?
Paying back a personal loan early might save a lot of money over time. In the long run, speeding up the payback procedure can improve your financial situation. Here’s how making early payments may result in saving you money over time.
Dropped Total Interest Paid: If you pay off your loan early, you will pay less interest overall. Personal loan interest is usually front-loaded, which means that a large amount of the interest is paid up front. Repayment acceleration reduces the effect of this front-loaded interest, resulting in significant savings.
Opportunity Cost of Interest: Interest paid on loans is an opportunity cost, meaning that funds that could have been invested or put to better use elsewhere are forfeited. Early loan repayment reduces this opportunity cost and frees up money for wealth-building activities like higher-yielding savings accounts or investments.
Faster Debt Elimination: By ensuring early payments, you can eliminate debt more quickly and free up funds for other objectives. When it comes to investing in your business, buying a house, or paying for school, the earlier you pay off your debt, the more quickly you can reallocate funds to things that improve your overall financial health.
Better Debt-to-Income Ratio: One important factor that lenders take into account is your debt-to-income ratio, which can be improved by repaying your loan early. Your eligibility for further loans, lower interest rates, and more favorable financial terms is improved with a lower debt-to-income ratio. Pursuing more ambitious financial objectives can greatly benefit from this financial flexibility.
Bottom Line
Early repayment of your personal loan can raise your creditworthiness. Effective money management will enable you to negotiate better loan conditions with prospective lenders. You can pay back your personal loan faster by prioritizing repayments, debt consolidation, loan balance transfers, foreclosing on loans, and having shorter repayment terms.
You can save money by taking a personal loan from reputable lenders and avoiding the extra fees associated with early loan closure. Furthermore, you can apply for a personal loan with attractive interest rates and minimal paperwork, customized to your financial needs.
A useful strategy in the quest for financial stability is deliberately terminating your loan early. In addition to the right-away relief from repayments every month, early payback results in significant interest savings, greater financial flexibility, and enhanced credibility.
Financial empowerment is one area in which a personal loan and similar solutions can definitely be helpful.