Tips to Repay Your Personal Loan Faster
If you have taken a personal loan in Singapore and cannot pay it back on time, there is no need to worry. You can repay your loan faster by increasing your EMI or using some savings.
Alternatively, consider working part-time to make the payments if you have extra time.
Increase your EMI
If you want to repay your loan faster, you first need to increase your EMI, which will help reduce your interest burden and save on future EMIs.
The best way to increase your EMI would be by 10-20%. You can do this by paying an additional monthly or increasing the original EMI amount by 10-20%.
This will reduce the impact of interest built up over the years, allowing you to repay your loan quickly without worrying about high EMIs.
Use your savings to pay off your loan.
If you have enough money saved in your bank account, you can use it to pay off your loan faster. You can save up to 50% of your monthly income and reduce the principal amount on your loan by a vast margin.
Putting aside $500 each month for six months would be $3000, which would help reduce your loan by 30%.
Saving money is not easy, but if you are consistent about it, there’s no reason you won’t succeed in repaying your loan early.
Prepay a part of your loan
Paying off your loan faster means paying less interest, which is good! If you have the money to do so, consider making payments more frequently.
Some personal loan providers allow for the prepayment of your loan at no extra cost, so be sure to check with them before doing so.
This can be especially useful if you have some windfall (like a tax refund) and want to put the extra cash towards paying down your debt faster.
Get a part-time job
A part-time job is a great way to earn extra cash. You can use the money to pay off your loan faster or save it for a future goal.
For example, if you’re planning on buying a home in the next few years and want to save up for a down payment, then having some extra cash on hand will be very helpful.
Pay off your loan faster by increasing your EMI
While increasing the EMI amount will reduce the tenure of the loan, it won’t affect its overall interest rate, as lenders charge you based on both term and interest rates.
However, if you’re planning to do this, then make sure that you have enough money in hand as well as an allocated budget to cover all other expenses such as groceries and electricity bills, etc., because once again:
You can’t just borrow money from someone else for this purpose! So either increase your current income or cut down on expenses. It’s up to you how much effort (and money) will make these monthly payments!
The tips mentioned above will help you repay your loan faster and get out of debt more quickly. Remember that if you cannot pay off a part of your loan, it’s better not to take any more loans.
Living on a lower income is better than going deeper into debt.