5 ways to repay your loan faster

The need to be debt-free and consequently stress-free can be a financial struggle. For most people, who have loans to repay, becoming debt-free is viewed as a financial dream. And to make this possible, people with piling debt have to resort to various ways to repay their loans faster, like cutting down on certain lifestyle expenses. But is that the only way to manage debt? 

Not necessarily. There are many different ways to manage debt so that you don't have to make too many sacrifices when it comes to your finances. Here are some simple ways to repay your loans faster.

Evaluate and Clear Your Debts
 

Before making any financial decision, it is crucial that you evaluate what you have and how you can make it work. The same goes for clearing debts. List down all your outstanding debts and determine which are long-term and short-term commitments. For example, your personal loan can be a short-term commitment, while your home loan can be seen as a long-term commitment. And hence, it would make sense to repay your personal loan first. Another way to look at it is by paying outstanding debts with a higher rate of interest firsts.

Repayment with Savings
 

First, concentrate on your savings thoroughly - review your credit card balance, unpaid bills and debts. You can budget your debt repayments by taking monthly savings and expenditures into account. Cut all unnecessary expenses and ensure your savings don't fall below a certain number. You can use various apps to keep a tab of your monthly expenses; some of these apps can even help you manage your money better so that you do not keep falling into debt.

Debt Consolidation
 

Paying off several loans at a time can become challenging to manage. Consolidate all your debt into a single amount to ensure you don't lag behind. For example, if you have a personal loan, a car loan and overdue credit card bills, consolidate all of them in one singular loan and pay the loan amount every month at one fixed rate of interest. In most cases, the chances are that you would be paying a lower rate of interest with a debt consolidation loan.

Reduce the Tenure
 

The best time to reduce your debt amount is right after an increase in income. Be it an appraisal or a bonus, use your windfall skillfully to repay a lumpsum amount, if possible, which would probably reduce the overall tenure. A lower tenure, even if by a few months, can offer quite a breather. Choose wisely when you decide on a tenure; you don't want to choose a long tenure where you would pay a bit more or a tenure that is too short and put yourself under a lot of stress. 

Transferring Loan to Bank with Lower Interest
 

Another viable option that you can look into is a loan transfer. If you find a lender from where you can get a lower interest than your current lender, transfer your loan to that bank. Doing so might be able to reduce your overall amount owed in a short time frame. However, it is essential to do the necessary research before choosing a lender to ensure this move makes financial sense.

Choose wisely and act accordingly to unburden yourself from the outstanding loan amount and their huge interests.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.