How Do You Manage Your Loan Repayment
KEYWORD PHRASES – managing loan repayments
Loans scare people. Whatever the interest rate charged (low or high), loans are debts that can burden your financial state and pose obstacles to the path to financial freedom. Although loans are usually the last resort, there are times when they are needed and useful. Be it for a business project or the necessity of a home, loans are taken for various reasons. But, once obtained, many borrowers are haunted by the issue of managing loan repayments. Several borrowers have horrific stories to tell about loans extended till retirement, missed EMI’s and harassing calls from lenders, or heavy penalties.
The major reasons people face difficulties with loan repayments is the lack of financial planning. A close look at your financial health and planning the outflow of money can settle the issue of loan repayments. If you have a loan and find it difficult to manage them, here’s a short guide on managing loan repayments.
Draw Up a Monthly Budget
A budget is always helpful when you plan for financial freedom. Having a monthly budget can ease your loan repayment schedules. List down your monthly expenses and income, including minor details of where your money goes. This will help you analyse where you need to cut down to repay your loans faster. Along with it, you also get an idea about your income and savings that will help you prioritise loan repayments. Make sure your monthly debt commitments do not cross 35% of your gross monthly income. Keep this in mind when taking loans can be helpful.
Prioritise Repayment of High-Interest Loans
While a single loan repayment is easier, many people face difficulty when managing multiple loans. Why? Although they draw up a budget, they fail to prioritise their loan repayments the right way. The fact that you have a debt is definitely a burden, but what adds to it is the interest rate charged. Higher the interest rate, more the burden of debt repayment. Minimising the total interest rate paid on all loans can reduce the load on your finances.
Debt avalanche is a strategy that can be helpful here. It involves putting the maximum amount of money against the high-interest rate loans without risking the repayment of other loans. List your loans with their interest rate and allocate the maximum amount to the one with the highest interest rate like credit card payments. Once that gets cleared, use the same strategy by moving on to the next one. Using this strategy can ease debt management.
Raise Your Regular Repayments
Did you get a pay hike? Or did you receive a fat bonus? Why not use it to free yourself from debts? Gains can come in various forms like pay hike, bonuses, income tax refunds, profits on your investments, etc. Using financial benefits that you gain to repay your debts could ease your financial commitments. Whenever you have extra money to spare, call up your lender and ask them if you can raise your repayment amount. If you have a good amount of money accumulated, you may even consider repaying with a lump sum amount. However, make sure there are no penalty charges attached to this. Some loans may come with conditions like a fine on early or increased repayments and advanced notice before increasing regular payments.
Use Investments and Schemes for Debt Commitments
Debts can be divided into good and bad debts. Debts that pay you back or has a futuristic financial value attached are good, but those that will not add to your financial value are truly a burden. Bad debts like credit card payments and automobile loans can add to the burden of your financial commitments. While using your retirement savings or any other investments is usually the last option, they can be beneficial if debts exceed and near insolvency.
Additionally, Singapore offers schemes like Debt Consolidation Plan, Debt Management Plan, and Debt Repayment Plan for those struggling to pay off debts. While DMP and DRP work with you to pay off your debts, DCP consolidates all your debts across different financial institutions and puts them in a single institution to help you ease your monthly obligations. Make sure to read the terms and conditions surrounding your investments and these schemes to ensure you use the right one.
Make Changes to Your Lifestyle to Repay on Time
Your spending habits and expenses can add to the difficulty of loan repayments. Apart from the above-mentioned things, there are little habits that would ease your debt commitments and take you closer to financial freedom. Keep a check on your spending habits. Do you splurge the profits you gain on expensive dinners and gadgets? Or do you balance them with investments? If the answer is former, you need to make changes to your lifestyle. Go easy on movies, dinners, shopping, etc., to help you trim your expenses and repay debts faster. Having a balanced financial routine is great, but make sure you prioritise your commitments in consideration with your goals.
Keeping these strategies in mind will allow you to ease the process of managing loan repayments. Balance is the key. Cultivating healthy financial habits will ensure you become free of debts and enjoy financial freedom.
Quick Credit Pte Ltd
Quick Credit Pte Ltd is the best money lender you will be able to find in Singapore. If you currently need help in anyway, do not be shy and let us know. Anything cash related, we will be able to help you. Our well train loan consultants will be able to come up with a good loan package to help you clear off all your outstanding bills or debts. In doing so, you will help you keep better track of all your expenses and money. We have been a licensed money lender since 2002.
We have the skills, knowledge and people to assist you through the entire loan process while providing you with excellent advice.
Interested in knowing more about how you can get a loan from us? You can drop us an email at email@example.com. Our manager will get back to you as soon as possible. Or you can drop us a message here and our manager will get back to you soon.
Alternatively you can call us at +65 6899 6188. Or visit our office at 2 Jurong East Street 21 #04-01A/B IMM Building Singapore 609601. The nearest MRT station to us will be Jurong East Station.