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REPAY a LOAN

Due to insufficient knowledge on the most proficient method to repay a loan early, many individuals in India get stuck into long term debt. What's more, because of debts, they develop problems like anxiety, hypertension, stress, blood pressure, and depression.

To be cheerful, you need peace with your financial life. You simply need to realize how to repay a loan quicker without disturbing your everyday needs.

In this article, we are talking about 6 steps that you must follow if you want to clear your loan quicker without disturbing your peace of mind.

Step 1. Create a plan to repay a loan

Firstly, it is very important for you to recollect all the bills and statements of the pending loans. This will help you to make a repayment plan for your loan. You have to set up a new budget for your monthly expenditure.

Create a list of all your loans, paid EMI’s, paid interest, and penalties. You have to calculate how much amount you have already paid, how much is pending, and what would be the interest accrued on that. This will give you an estimated amount that you need to repay your entire loan and become debt-free.


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Step 2. Stop using your credit cards

If you have burdened yourself with those huge amounts of credit card bills that are unpaid or half-paid, stop using them right now.

Credit cards are definitely good for certain things if you are using them in the right way. It gives you the benefit to buy things or spend on credit but you have to make sure that you are not overusing. It can cause a huge debt on your head as the interest rates on credit cards are quite high.

If you are becoming a habitual spender, you must surrender your credit card. When you do not have to pay for the purchase at that moment, it often leads to unwanted and unnecessary spending.

 

Step 3. Repay a loan with high interest first.

When you are fully aware of all the loans and debt that you have accumulated, pay them in the order of repaying loans with the highest interest rate at first. It will decrease your overall burden.

It will also make it easier for you to get rid of the remaining loans and debt. You should always make sure to avoid keeping loans with high-interest rates for a longer period of time and repay them as quickly as possible as it overburdens you with a lot of debt and stress.

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Step 4.  Cut down your expenses

The next step you should do to clear your loans is to cut down your expenses. Yes, this is a painful task but it is always worth taking some pain at the moment rather than long-term sufferings.

You should make a list of all your unwanted and luxurious expenses. Then the next step is that you must get rid of them completely and only live to your means.

For example, use more public transport, reduce your shopping, avoid eating out, don’t throw parties, and so on. The idea here is not to stop your spending but to consider if the spending is productive in nature. If not, you should avoid it for some time.

We are not asking you to cut down on your lifestyle. But you must make sure that you are not spending unnecessarily on regular basis.

 

Step 5. Generate a side income

 If you have a side income, it will surely help you to repay a loan amount. You can do various jobs part-time to generate extra income and use it to repay your loans faster.

For example, you can do some online work like data entry, digital marketing, customer service, etc; give tuitions to nearby students, you can also work in sales. There are a lot more options if you really want to work and make a side income.

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Step 6. Renegotiate the terms while you repay a loan

When you are repaying a loan, the last thing you can do is to renegotiate the terms of the debt with your creditor. You can approach your bank or the loan provider and ask them to restructure your EMI plans.

This way you can communicate with the lender for your repayment plans to reduce your interest or EMI. It seems difficult but it is actually possible and it can prove to be of biggest help while you repay a loan.

 

Conclusion

Undoubtedly, if you repay a loan smartly, you will not only save you valuable time, but you will also save a larger portion of your hard-earned money. By analyzing your financial position, you can select from various routes to repay your loans. This will reduce your debt obligation and will also improve your credit score. It will also help you to create financial stability in your life.

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