There are times when you realize that your current requirements are not met solely by your savings or salary. Thus, taking a loan becomes the best option in such scenarios. Getting your loan approved and bringing home that brands new KTM Duke 125 is surely a matter of joy. However, taking a loan also means paying EMIs (Equated Monthly Installments) every month. If you are not careful enough from the start, those EMIs can become such a burden that takes away the joy of owning a new bike. So, read on to know the smart tips to manage your EMI effectively.
One of the smart tips to manage your loan EMI is to figure out the proper loan amount and find the right lender beforehand. EMIs tend to increase with an increase in the loan amount. So, assess the amount that you are okay with paying on a monthly basis and find the lenders that offer better schemes. Even the smallest fall in the interest rate can be a breather in the long run. Also, weigh the pros and cons of a flexible and fixed-rate loan scheme before deciding on one.
A good credit score is a prerequisite to getting a better deal from lenders. Pay all your pending bills and earlier loans to strengthen your credit score before you apply for a loan.
Any major increase in your income (like a matured fixed deposit or a bonus) should ideally go towards prepaying your loan. The lump-sum amounts bring down the loan tenure, as any Bike EMI Calculator will show you. The best time to make them is during the initial years of taking the loan because the principal remaining is high at that time. However, ensure that the lenders are not putting any additional prepayment charges.
Defaulting EMIs will affect your credit score and get you penalties. Lenders mark such defaulters and give out this piece of information to the credit bureaus. So, one of the smart tips to manage your loan EMI is not to come under such a dubious category. If the finances have taken a hit recently for any reason, talk to your lender to request an EMI break. In some cases, lenders might let their customers refrain from paying EMIs for a smaller time period.
Refinancing is all about replacing a present loan with a new one as the new lender promises a better term. People tend to refinance the loans to bring down the EMIs and loan terms or even modify the type of loan program. However, you will have to pay a processing fee for this switch. So, calculate if the money you save by the end will outweigh the additional costs, you are going to incur at present.
Something like a Bike EMI Calculator helps to analyze your capacity to repay an automobile loan. It helps you know the amount you need to take so that you can pay the money comfortably each month even if the interest rates and the principal amount keep changing.
When you keep the tips mentioned above in mind and plan properly, it becomes easier to manage EMIs. Keeping your credit score high and giving a lump sum amount as prepayment can help to get the loan monkey right off your back. Also, make sure that your monthly budget does not go haywire because of the loan. Try to have an emergency fund to cope with sudden needs.
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