Even though loans or credit cards give you access to quick funds to finance your goals, servicing them can be quite a task, especially when you have availed more than one loan. This is because multiple loans are likely to increase your mental and financial burden as you will be handling a number of debts simultaneously. Also, you will have to pay an overall higher interest on multiple EMIs. This can, to a great extent, consume most of your monthly income, pushing you to compromise on other needs. Moreover, if a situation demands it, you may have to apply for additional credit. This can lead to a debt trap that you may find hard to get out of.
To conveniently close your debts sooner, follow these clever tips and work towards financial freedom.
Consolidate all your Debts with a Single Loan
Multiple loan repayment means keeping track of the EMIs and interest on loan for property rate alterations for each loan, individually. Any delay or missed EMI can attract penal interest and will decrease your credit score too. Therefore, as a first step, you must consider consolidating all your loans into a single, affordable loan, so that you get debt-free sooner. Consider availing a secured loan like a loan against property in India for debt consolidation to get access to a significant sanctioned amount on lower interest rates.
As compared to unsecured loans, top lenders like Bajaj Finserv allow you to qualify for this secured loan on simple Loan Against Property eligibility criteria. This loan against property features a high sanction of up to Rs.1 crore if you are salaried and up to Rs.3.5 crore if you are self-employed. Moreover, the loan against property document requirements are also very minimal, so as to make application easier. To make repayment easy, loan against property tenors are extended up to 18 years if you are self-employed and up to 20 years if you are salaried. You can also take this loan with Flexi Hybrid Loan facility. This facility allows you to borrow multiple times from your sanction as per your needs. Moreover, interest is only applied to the amount you use and you can further choose to repay in interest-only EMIs for the entire tenor. This helps you manage your cash flow better.
Consider Prepaying Expensive Loans first
You can also consider prepaying loans in the order of priority. List out all your outstanding loans and write down the outstanding amount and rate of interest next to each of them. Next, rank the loans in ascending order basis interest rates, and then start prepaying in that order. This will sharply reduce your interest payments in the coming days. Also, consider increasing the EMI amount of such costly loans without affecting the EMI payment of other loans. After you start clearing such loans one by one, you will only be left with affordable credit only.
Increase your EMI Amount in line with your Salary Hike
Every year, you get a salary hike. Although inflation may overshadow a portion of the hike, you can still increase your EMI amount annually. This will reduce your overall interest burden or allow you to repay faster. If you have more than one loan, again address the loan that charges you the highest interest first.
Put Windfall Gains and Bonuses to Better Use
You may have a smile on your face every time an investment matures, you win a lottery, or receive a tax refund! You may be tempted to go on a tour or buy a home theatre or reinvest such an amount. However, you can do better if you contain your excitement and use such money to repay your debt. Again, divert most of your windfall gains towards the repayment of high cost loans. You can also choose to foreclose a loan if you have enough surplus at your disposal. However, be mindful about the prepayment and foreclosure charges that your lender may levy.
Pay your Credit Card Dues through EMIs
Credit cards are financial tools that can help you pay for fixed and variable expenses with ease. By using a credit card for payments, you can enjoy an interest-free credit for as many as 50 days, which make them even more attractive. However, if not managed well, a credit card can land you in a debt trap. If you default on credit card dues or make late payments, you will be charged as much as 3-4% interest per month. Hence, if you used your credit card extensively in a particular month and can’t pay the bill in a single go, request your issuer to convert your credit card dues into EMIs. However, if you still miss out on EMIs, you’ll be charged the regular interest rate. So, be mindful of your actions and limit your use of credit cards as per your income.
With these useful tips to address your financial issues, you should be able to work towards building a debt-free future. Remember, credit is supposed to leverage your finances, not land you into debt. To enjoy customised deals on a loan against property for debt consolidation and a range of other financial servicesfrom Bajaj Finserv. Here you can access a range of deals tailor-made for you and apply for them hassle-free!
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