Usually, personal loans help in making our lives simpler by supporting us out at the time of cash crunches. However, you should keep in mind that repayment of personal loan in UAE is a liability. Failing to make the same can land you in the hot water at any time. The whole concept of opting for a personal loan is to help you out of trouble instead of pushing you into it.
Generally, these loans are costlier and can result in high personal loans EMI. In case you have multiple loans, there can be times when it could be challenging to repay all these loans. Managing more than one loans and their EMIs could be frustrating sometimes. Escaping out of all the loans and leading a life without the burden of debts could seem like a dream.
However, by going in the right direction, it can be possible for you to get out of all the debts. Being free from various debts won’t happen within a day or overnight. It takes consistent effort and considerable time to escape from the quicksand of debts. But it isn’t completely impossible! You can enjoy a debt free life by taking some wise steps as well as growing disciplined financial habits.
The personal finance experts suggest that by making debt repayments through in these effective ways can be of substance. Let’s first learn what exactly are these ways and how they can assist us in paying our debts off.
- Start with Small Repayments to get Debt-free Gradually
You simply need to picture a snowball rolling from the top of a mountain of snow. When it started rolling, the ball was tiny. But as it keeps rolling down, it starts getting larger with each roll by adding layers of snow on it. As and when it touches the plain, it won’t be a ball anymore. It will become a boulder.
Similarly, in case of loan repayment, you should begin to pay off your loans that have a little outstanding amount without considering the rate of interest. With time, you may get momentum and aim to repay the next loan. It is suggested that you maintain a table or list of your credits, arranging them in ascending order such that the lowest one stays at the top. You must then aim to pay back the lowest amount initially, gradually moving to the next.
When you repay one loan, there might be some spare amount with you. Collecting all those extra funds, you can be able to make repayments on the next loan. In this manner, putting in consistent effort for a period of time helps in making you free of debt.
- Start by Repaying the Costliest Loan
Under this way of making repayments, it is suggested that you first pay off the highest loan amount. In this case also, you must maintain a list as advised in the first method. However, here the list of credits is maintained in a descending order based on the rates of interest. Therefore, the loan that has the highest rate of interest will take the top position on the list. This loan on the top will be given priority over others.
You must try and make repayments for the costliest loan first so as to save on interest outgo. When you get rid of the costliest loan, a lot of money can be saved as you won’t have to pay that high amounts of interests. This will make it easier for you to repay the remaining loans.
- Negotiation for Lower Rates with the Lender
Sometimes, the banks or lenders may not reduce the rate of interest they charge on your loan in regard to the changes in the policy rate. In such a situation, you should contact your lender and try to negotiate the rates on your loan. Before this you need to compare personal loans interest rate offered by other lenders. However, some lenders may end up applying a fee for processing the reduction in the rates.
- Transferring to a Loan Charging Lower Rate of Interest
It might happen that you find out that the rate of interest on your loan is not in sync with the rates in the market. In this situation, you must consider moving to some other lender or bank that offers a lower rate. If you transfer the loan, you might have to bear a processing fee with the portion of the balance of your loan (usually around one percent of the balance). It is recommended that you check the cost of transferring the loan against the rate of interest benefit. In case the difference in the interest rate is small, the loan transfer might not make a huge impact on your savings considering the transfer charges.
- Increasing the EMI
We generally consult the personal loan EMI calculator to check the installments on our loan. It is possible that your income rises with time. However, your EMI more or less remains the same during the tenure of your loan. Hence, you can gather the extra amount you are earning on your income for making a pre-payment of your loan. Alternatively, you can also request the lender to increase your EMI by a certain amount with each financial year. This way you can increase your repayments for settling the loan sooner.
- Making Changes in your Lifestyle
Usually, there are little things that can go a long way to maintain your finances or expenses in fine fettle. We have made a list of various ways of reducing the burden of repayment of personal loan in UAE so far. However, you must also make certain adjustments in your lifestyle for accommodating these repayments. Apart from this, we must also make sure that we have enough funds for paying higher EMIs. A change in lifestyle is required until all the debts have been repaid. This might refer to cutting the costs on unwanted spending and luxuries. Do not carry your credit card along when going out, and try to make only cash purchases. Doing so will already help in reducing your spending propensity. Make only the necessary expenses and focus on reducing your debts first.
Over to You!
Personal loans can act as a requirement in a situation of financial stress. It is amongst the reliable and easy options for getting finance to solve your monetary problems. In case you have a few personal loans under your belt, you may run into a situation of cash crunch sometimes. This can be a tough situation to deal with and may turn really intense.
The repayment of debt needs a lot of self-control, determination, and discipline. While you are already living under a pile of debts, ensure that you do not add more debts in your portfolio. Try to keep yourself away from new debts. With high personal loans EMI, it is important that you try to save as much as you can in order to become debt free.