Technology has impacted our lives in a positive manner and has relieved us from the stress of multiple things. Tasks that were quite difficult have become easy with the help of technology. In the domain of finance, technology has really helped people. The task of loans was very difficult and involved too much physical documentation. But with time, the task of taking and approval of loans, including consolidated debt loan, has become easy and digital.

Borrowers can even schedule their EMIs and the system shall leave a reminder so that a borrower will never miss EMIs. The documentation required for the loan approval can also be done online. Even there are some banks and NBFCs that are providing you with the loan amount of your eligibility. The rise in technology has definitely brought ease among people who are utilizing financial services. After taking the loan comes the stage of repaying it, which might become difficult for the people if they have not planned it. A planned loan shall bring you ease and become a road to fulfill your dreams. The article below will help you understand the strategies for loan repayment and consolidating debt options. 

Advantages of Repaying Loans on Time? 

Repayment of the loan is the next step after your loan gets approved and disbursed. Repaying the loan has become easy with the help of time. Here are a few advantages of repaying the loan anytime. 

• Repaying a loan on time will maintain your CIBIL Score. It shall also help you to build your credit score. 

• Repayment of the loan on time will also make a person eligible for a loan of a higher loan amount. 

• Sometimes EMI of the loan is scheduled on the date before your salary comes. It is preferable to set the date after you receive your salary. Repaying EMI even after one day shall make you a defaulter. Many banks provide you with the facility to schedule the EMI on a particular date. 

• Loan repayment will also make you eligible for the Top-Up loan that is approved based on the timely payment of an existing loan. 

• Repaying loans on time will help you to make good relations with the bank. You can also opt for the balance transfer if you have good relations with your bank. 

How to Repay Loan Wisely 

Understand Your loan

Get a clear understanding of your loan, including the interest rate, EMI of the loan, and tenure period of the loan. Talk to the bankers and get detailed information on all the terms and conditions for the loan. Before signing the loan agreement you should have all the information with you. 

Monthly Budget

Prepare a monthly budget so that you will never run out of money and loan EMIs will no more scare you. Budgeting is a good option if you are considering winding up the loan early. In addition, you shall have a clear idea of where your money is going per month. 

Focus on your debt with the highest interest rate

If you have multiple loans then choose to wind up the loan that has the highest interest rate. In this way, you shall be free from the debt early, by paying the principal amount and interest money before time. 

Prioritize your loan with the lowest outstanding amount

If you are running low on money then instead of repaying the loan with the highest interest rate first, start by paying the loan that has the lowest outstanding amount. And then moving on with the loan that has the second least loan amount. 

Debt consolidation

A method where you take a single loan to pay off other loans. This might be a good option if you are overburdened with Loans. 

Pay extra money toward debt

Pay an extra EMI in the year will help you to wrap up the loan a bit early than expected. Pay 13 EMIs instead of 12 and it will wind up the loan early. 

Debt Consolidation

Take out a new loan or credit card to pay off other existing loans or credit cards. This is known as loan debt consolidation. You might be able to get better payout terms by merging several loans into one, larger one, such as a lower interest rate, cheaper monthly payments, or both.

Conclusion

The article above will explain to you the repayment of loans. The advantages of repayment of loans and debt-consolidation. It shall guide you in the process of repayment of the loans. It is important to make a strategy for the repayment of the loan. Become financially aware and travel on the road to success.