At some point in our lives, we all face an unforeseen need for cash — falling short of money to buy your first bike, needing a hand to finance your son’s wedding, or facing a shortage of money during a medical emergency.
Personal loans have become a simple solution in times like these, and quick approvals have made them a convenient fall-back option. Since these loans often don’t require a collateral, the interest rates tend to be on the higher side.
Take the example of Sumit, a prospective manager at a leading MNC, with an increasing income and a flourishing career ahead of him. To keep up with this lifestyle, his living standards have gone higher and savings, lower. While planning a plush foreign vacation for his parents’ 30th anniversary, he realizes that his savings won’t cover the entire trip. Sumit thinks of taking a loan, but is apprehensive about the high interest rates.
So, he decides to research on some smart repayment plans to reduce the burden of EMIs thereby increasing savings. Here are some smart personal loan repayment options that Sumit learnt about:
Step-up Repayment Plan
This repayment plan is ideal for individuals who’ve just got onto the career ladder. The step-up repayment option revamps the EMI scheme so that the payments start off at a relatively lower rate, increasing with time. Someone who’s anticipating an increase in their income over time could sign up for this scheme. Another plus? The fact that higher EMI payments will also lead to a shorter loan tenure means that the borrower can save on interest as well.
Another effective way to save up on interest payments and wrap up your loan is by repaying it before the due date. This ultimately lowers the cumulative interest that needs to paid. At the same time, remember that most banks and NBFCs charge a penalty for paying off the amount before the due date, so weigh the pros and cons before you make your choice.
When you can’t pay the full loan amount but want reduced interest and EMI payments, opt for a part-payment option. The total part-payment amount shouldn’t be too minor though, otherwise the penalty incurred on part-payment will negate the benefits of this payment plan.
So there you go — three simple options to avoid the dreaded high-interest trap! Do your research well, get in touch with Clix, and you’ll be on your way to a simple, stress-free personal loan!
*T&C Apply. Disbursal of the loan shall be at the sole discretion of Clix Capital Services Private Limited and it’s group companies subject to its policies and execution of such documents as maybe necessary