Personal loans are “unsecured” loans that are provided without any collateral/mortgage. Availability of instant personal loan has helped consumers to avail credit in a much convenient way. To get more details about a personal loan, know more with SC, India. A personal loan is a preferable source of funds as it can be acquired with minimum documentation. However, since the risk factor is higher for the lender in an unsecured loan, the interest rate is also higher than other secured loans. These high interest rates can feel like a burden in the long run if a borrower does not manage his expenses economically.
To avoid a personal loan burden, you may follow these tips given below by financial gurus and experts:
- Take a Debt Consolidation loan: If you have multiple loans lined up, try to roll them into one single loan which is commonly known as a debt consolidation loan. That is, take a big amount of loan to pay off all your loans. Take an instant personal loan that would be enough to pay off all your outstanding debts. This would help you manage your expenses in a better way. Moreover, the EMI of one loan would definitely be lower than the EMIs of multiple loans.
- Use investments to clear debts: Your current investments are a source of income for you. You can borrow money from the market against your life insurance policy or your PPF (Personal Provident Fund) account. In the third year of your PPF account, you can take a loan of up to 25% of your balance. However, an investment account should be touched only in extreme situations as it is a long term earning process which must not be hampered in between. An instant personal loan is a better option in this case.
- Use the stack method: The stack method simply means clearing loans with a higher interest rate first. It means you should pay off your debts in descending order. A high interest rate loan puts the greatest burden and clearing it off early would relieve a borrower. If needed, take an instant personal loan to clear off the existing loans.
- Try debt snowball method: As the name suggests, this method follows the process of making a snowball. If you roll a small snowball, it would collect more snow along the way and turn into a big snowball. Similarly, it is advised by financial gurus to start with the small loan first and pay off your debts in ascending order. This would slowly but steadily, remove the burden off your shoulders.
- Increase repayment with income appraisal: A lot many of us focus on improving our lifestyles with an increase in income. However, if you are under debt, your first priority should be using your extra income to pay off the credits taken. If you receive a bonus or an increment, utilise that extra money to pay off an extra EMI. Know the proper utilisation of money to make the most benefit out of it.
- Change your lifestyle: Needless to say, if you are under debt, the first and foremost thing you should do is make a compromise in your lifestyle. Your priority list should be modified and paying off your debts should be on top of it. Note down all your regular expenses, and then cut off the unnecessary ones like expenses on movies and dinner dates, vacation, shopping etc.
Personal loans are a convenient source of funds but it is a debt and a debt can create a burden if not managed efficiently. An instant personal loan is helpful and beneficial only if you manage to pay it off on time.