In a world actively dependent on some form of credit for financing major expenses, it is typical for personal finance experts to increase the emphasis on responsible borrowing. While there’s nothing inherently wrong with taking out personal loans, they can be difficult to manage if their repayment is not thoroughly planned out. In this article, we’ll lend you a helping hand if you consider yourself to be someone who’s struggling to keep up with the monthly EMIs of your loan.
- Start with the calculation:
Find out the true value of your instant personal loan by calculating the total amount you would have to repay. Include the accrued interest and other amounts from different fees associated with the loan. Once this figure is calculated, calculate the total amount payable each month. Having clarity on these figures would help you realistically plan out the repayment. Start by setting aside the amount for the fees that are not recurring or would not make up a portion of the monthly installments.
- Try to save a fixed amount every day:
Divide the monthly amount by the number of days in a month to get an estimate of how much you’re supposed to save every day. Always round off to the upper whole number if your answer is in decimals so that you don’t end up saving less. Make it a habit to set aside a fixed amount from your daily expenses, which shall directly go toward your monthly EMI.
Leverage the power of compounding to afford the monthly repayments rather than stressing out in the last week of the month. If you often make digital transactions, use a savings app to lock in a fixed amount until the end of the month. Some multipurpose loan apps may even help you save, so you should check if your loan app has this feature. Conversely, if you frequently pay in cash, the traditional piggy bank savings method would be more convenient.
- Keep a buffer:
No matter how much time you spend on a budgeting app trying to come up with the perfect repayment plan, there’s a chance that some unforeseen event will act as an impediment. You may miss due dates because of an illness, a busy day at work, or simply due to forgetfulness. Either way, you may have to pay the penalty if your lender doesn’t offer grace periods. Thus, in addition to the money saved for the EMI, ensure that you always have some more amount that can compensate for missed payments. It can be a good idea to set up payment reminders on your loan app to ensure that you never miss any payments. If the app offers automation of payments, you may want to set it up and steer yourself clear of any penalties.
To conclude, the best way to lay out a personal loan repayment plan is by taking calculated steps. You can use a savings app or a built-in feature of your loan app to do calculations, allocate an amount daily for the EMI, and set payment reminders. By thinking realistically and ahead of time, it’s possible to repay a loan without any hassle.