Contrary to popular belief, individuals can opt for more than one loan. In fact, there are families that might be having a car loan or home loan in India besides a personal loan. The biggest concern with multiple debts is repayment. While different financial products might offer you different benefits, they also come with varied interest rates, tenure, and other repayment conditions.
Although multiple loans might cut down on your monthly disposable income, there is no reason why you should be pulling your hair out, trying to overcome debt. Here are a few tips on how to tackle multiple loans smartly.
Prioritize paying off one loan at a time
The way to clear off debts faster is by listing one loan repayment at a time, with the most expensive one on top. For multiple home loans in India, repay the ones with higher interest rates first. You can also prepay to lower EMI amounts.
Repay more with an increase in income
End debts faster by increasing the EMI amount for every rise in income. By making such pre-payments, borrowers can reduce home loan tenure remarkably. Also, direct the influx of finances towards prepaying the most expensive loans first, so that you can move on to the next quickly.
Go for debt consolidation or balance transfer facility
Managing a single repayment amount is way easier than tackling multiple debts. For this benefit, borrowers can choose debt consolidation of multiple home loans in India. Also, if you find your current lender’s interest rates overpowering, you can shift the outstanding to lenders offering lower rates, via a balance transfer.
Refrain from adding to credit card debts
Credit cards might seem convenient for their 50-day free credit. But once rolled over, they can charge a whopping 35-44% interest p.a. This is why you must not accumulate credit card debts besides having multiple loans underway. This will not only strain your monthly budget but will also impact your credit score negatively.
Also, while you are at it, be aware of the various tax exemption benefits offered for each loan. This way, you can bring down the cost of expensive funds like home loans in India. While under debt, multiple or not, repayment should be your top priority.
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