Multiple Options To Pay Your Loan
Today we have brought you a compilation of loan repayment options that you can use. We weigh their pros and cons to tell you who serves you well and in what capacity.
Bank suggestion
This is the option that you get when you take a loan. The bank tells you the interest rate, from which you can choose the tenure and your breakup. This is the easiest method of repaying debt. Eventually, you just have to walk on a straight line. In the coming few years, your loan will run out and by then, you will have to pay on time. However, it is the best option for those in government jobs. Some people quit their government jobs and hence, their income flow never stops. It is necessary for this type of repayment option.
Part or full prepayment
This is the most attractive option here. All you have to do is save money while repaying the debt. Then, you make a large prepayment for your loan and reduce the principal significantly. In this way, the interest amount of your loan also decreases. However, the problem is the prepayment clause of the bank. This can affect not only your loan amount but also its tenure. Also, since banks offer loans at a rate of interest that may change in the future, so do that factor in your decision.
Increasing EMI amount
Instead of paying a fixed EMI for the repayment period, you can increase your EMI amount whenever you want. What it does is reduce your loan amount slightly by taking care of interest. Reducing the loan amount means shorter repayment tenure. You can call it part-prepayment. However, you need to keep an eye on the prepayment clause in the loan. Some banks limit the prepayment amount to a limit. Also, watch out for prepayment fees that can be levied. Due to these charges, you may have to pay more than what you had planned.
Waiting for it
The last option in our list of loan repayment options awaits. The financial market is an ever-changing one, just like any other market. Therefore, there is always a possibility of reduction in interest rates. If interest rates fall after one year, it will put less financial burden on you. In short, not only your loan amount, but also the tenure will be reduced. It would be without you to even look at additional finances. But it is a double-edged sword. If interest rates rise in the future, you will have to pay higher EMIs.