It is impossible to avoid financial emergencies, despite the best planning. An emergency can either be to pay off sudden medical bills, consolidate debts, finance a trip or for various other reasons. For all these reasons, one can easily apply for a personal loan. Personal loans refer to the unsecured loans that a borrower can avail to meet sudden unexpected expenses. Since it’s an unsecured loan, you will not have to pledge any collateral in return. Moreover, it is a cheaper option in comparison to a credit card.
Undoubtedly, a personal loan can help you tide away immediate expenses, but you must bear in mind that you need to repay the EMI on a monthly basis in equal installments without any delay or default to maintain a good credit score. Therefore, when planning on taking a personal loan, you must consider certain things such as your present financial state, repaying capacity, credit score, etc.
Let’s explore some tips that can help you plan your personal loan EMI payment in a better way: .
Use Personal Loan EMI Calculator
The amount of the loan is usually determined on the basis of estimated expenses or needs, whereas the lender decides the interest rate. The only variable that you can control is the tenure of the loan. Altering the loan can change the EMI. If you have a low income, it is better to opt for a long-tenure loan to meet the expenses. Doing this will help to ensure that you quickly pay off monthly expenses without pinching your pocket or hampering your lifestyle.
Don’t Pay More than 50% of Monthly Income for EMI
You must ensure that the amount you pay towards your EMI should never exceed 50% of your monthly income. You must never cross this limit. Doing this helps ensure you have enough money to meet normal living expenses.
Never Treat Credit Card as the Extension of your Payslips
Many people do not understand the dangers of falling into the credit card trap. The lure of easy availability of finance is too good to resist for most people. Owning multiple credit cards also brings an unavoidable danger, as you will end up using one to pay off the due on the other ones and thus fall into a debt trap.
Create Contingency Fund
It is advisable to put aside a sum of money as soon as you start earning to stay financially secure during uncertain times. Imagine a sudden mishap, a medical emergency in the family, or a sudden job loss. Under these situations, you will need funds to tide you for the time being until you get your next job. However, the EMI payments won’t stop. They will fall due every month. Therefore, it is extremely crucial to have contingency funds.
Maintain a Good Credit Score
Defaulting on paying up your EMI payments adversely affects your credit score and thus hampers your chance of availing loan. Thus, it is extremely important to manage personal loans responsibly and repay them on a monthly basis.
Apart from this, you must set up a monthly reminder to fund the account from where your EMI is paid. Manage your personal loan repayment EMIs, requires self-discipline, and you must inculcate this habit. Failure to pay EMI amounts on time may lead to grave issues, but you can go for a personal loan defaulter settlement to get out of the situation.
You can always rely on Freed for a quick and reliable personal loan settlement process. Systematically avoid your debt with India’s 1st debt relief platform. With AI-driven algorithms and decision-making, FREED analyses your debt & determines your eligibility and helps you get a personal loan settlement letter without any hassle.
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