Savings are insufficient for various people who wish to turn their aspirations into reality or overcome unexpected needs. This is when people lean towards personal loans to meet their financial obligations. You name it, and many NBFCs have a personal loan for it – whether it’s for buying a used car, paying for a vacation or higher education, or covering wedding or home improvement costs. These loans, such as personal travel loans and more are unsecured in nature and don’t require collateral by the lenders.
The application process is simple and digital, and some lenders even provide instant loans online without documents. As a result, compared to other types of loans, these loans are in high demand in the financial market. You might receive loan approval in as little as 15 minutes. The issue arises, though, when it comes to repaying the loan EMIs.
Top Five Tips to Manage Your Personal Travel Loan EMIs Better
When you pay your personal loan EMIs on time, you tend to improve your credit score, which means you won’t be denied a loan or have to pay a higher interest rate if you need money in the future. Failure to manage your EMIs, on the other hand, may result in loan default, and in turn, you will suffer a bad impact on your credit score.
Here are some hacks to help you manage your personal travel loan payments:
1) Assess your repayment capabilities before getting a loan
Identifying your loan payback capacity is the first step toward effective EMI repayment. Make sure you understand the personal loan interest rate and repayment options offered by the lender. This information will help you calculate the total EMI for the loan duration and plan your budget more effectively. Because this instant loan can be obtained online without any paperwork, many people overestimate their financial capacity and end up in serious financial trouble.
Online personal travel loan EMI calculators are now available from a number of lenders. Borrowers can use these online calculators to determine their EMIs on a personal loan in real-time. Of course, you should only take loans that you are confident you will be able to repay on time. EMI calculators are useful tools that can help you make an informed decision in this regard.
2) Make a spending plan
In ideal circumstances, your monthly loan payback requirements should not exceed 50-60% of your monthly income. The percentage range suggested ensures that you can comfortably handle your everyday expenses without jeopardising your financial security.
Any EMI amount deducted from your salary that exceeds the aforesaid limit would put a strain on your monthly budget. This may result in you deferring or missing EMI payments, negatively impacting your repayment history and lowering your credit score.
3) Keep your CIBIL score high
A CIBIL score is used to assess a borrower’s creditworthiness. It’s a three-digit number that shows your creditworthiness based on your credit history in the past. Though a credit score of 750+ is considered great, a score of 700 or more is considered good in general. Borrowers with such CIBIL ratings are more likely to receive personal loan approval swiftly at affordable interest rates.
Personal loans with low-interest rates are available to borrowers with a decent CIBIL score. A high CIBIL score also demonstrates to the lender that you are a reliable, risk-free borrower. Furthermore, if you have a high CIBIL rating, your request for an EMI payment extension is more likely to be approved.
4) If at all possible, Increase Your EMI Amount
Many NBFCs provide you with flexible repayment options that you can use whenever you want. If you’ve received a raise or started a part-time job, you can use the extra money towards paying off your debt faster.
You might also ask your lender to increase your EMI amount so that you can pay off your loan faster and get out of debt. If you’re having trouble paying your EMIs, you can ask your lender to increase the number of your EMIs and lower their amount to make them more bearable.
However, there is a caveat: the longer it takes you to return your loan, the more interest you’ll have to pay. As a result, strike a balance between EMIs and repayment time.
5) Prioritise paying off high premiums
Make a list of all of your debts, as well as the interest rates on each one. Reduced interest rates and income tax benefits can be availed on a home loan or a student loan. Interest rates on credit cards and personal loans, on the other hand, are often higher. Make it a priority to pay off these debts so that your credit history and CIBIL score are not harmed.
Many lenders have begun to offer instant loans online without documents for the ease of the borrowers. Personal loans are now more popular than ever. However, this does not negate the need to pay your EMIs on time. Any missing EMI payments will negatively impact your credit score, risking future credit.
Loans like personal travel loans are large financial commitments that should only be taken on if you believe you can manage them in addition to your other expenses. You can accomplish both with a little foresight – enjoy life while remaining within your means to avoid being pursued by creditors.