Nowadays, many people have multiple accounts in their name such as credit accounts, bank accounts, and so on. A large number of people are also in debt, like credit debt, home loan, car loan, education loan, etc. Personal loans are unsecured loans in nature while home loan, car loan, etc are secured loans. Unsecured loans don’t require collateral and have higher interest rates in comparison to secured loans. On the flip side they come with flexible repayment tenures. Today there are several lenders offering personal loans at different interest rates to attract potential loan takers. India’s First Free Online Financial Advisory Moneymindz
In case you have several loan accounts, you would be finding it hard to manage and clear all of them. If you are effective, you can easily clear everything. How to do that?
- Repay Personal loan EMIs before your monthly credit card dues
Clear off your monthly repayment amount on your personal loan account before your credit card account. Late payments on Personal loans will impact your credit score more compared to late payments on credit cards. By prioritizing your payments, you can get things a little better at least. India’s First Free On call Financial Advisory Moneymindz
- Refrain from adding additional credit card debt
You already have credit debt and personal loans hanging over your head ready to behead you any time. Don’t sharpen the blades by getting into more debt. Start working on reducing them, not increasing them. Remember, the sharp axe can fall on your head at any time! So don’t take extra debt. Just focus on clearing the existing debt.
- One step at a time
You need to work on clearing one loan at a time, though it depends on how many debt accounts you have. But take baby steps and clear it one by one. This will ensure you don’t get broke for the month paying for the loan closure. You ought to try pre-closing the account with the highest interest rate first and subsequently clear the remaining one by one. Certified Financial Planner Kuber Mindz Moneymindz
- Never take smaller loans to manage monthly repayments
Some people decide to take a smaller loan in order to fund the monthly repayments of the bigger loan. You might be thinking of doing the same. This is futile because you will anyway have the loan to repay still. Clear your dues first. If you take additional loans to clear this loan, you are still in debt and will be in debt even after clearing this loan as you will; have to clear the new loan.
- Don’t succumb to Lifestyle Inflation
Let us assume you got a raise or a bonus. Somehow you have got extra income, even if it is from investments. With that extra income, you might think of raising your standard of living “lifestyle inflation”. Instead, put that extra money into clearing the loan. Pay it as EMI.
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