If you’re planning to take out a personal loan, then you should know that it comes with the obligation of repaying the fixed amount of monthly instalments over an agreed period of time. As a matter of fact, ensuring that you pay your loans on time has its benefits such as improving your credit score and hindering you from paying the interests that may incur from late repayments.
That is why, whether you’re planning to apply for a personal loan in Singapore from banks or licensed moneylenders, you must not only ensure you have the resources to pay your repayments on time but to do your best to stay ahead of your repayment dates too. Don’t worry, there are tips for you to practice to help you pay your loans on time.
#1 Create A Budget
Right off the bat, you need to create a realistic budget tailored to your spending habits and financial status. In doing so, you’ll find that you will always have the money to repay your personal loans as well as ensuring that you don’t end up accidentally spending the money meant to pay your loans on something else.
But, before you do, you need to understand the dynamics of your loan and how much you’re saving monthly. In fact, by tracking your daily spending, it’ll be easier for you to differentiate your wants from needs, and thereby, determine which things for you to stop spending on. By creating a division of essential and less important things to elucidate your spending habit, you’ll find it even more possible to refrain from spending your money on non-essential items.
If you’re worried that you might have a hard time keeping track of your expenses, there are apps available on your smartphone that will help you create an efficient budget plan. Here’s another bonus point: these apps can also help keep track of your spending habits, cap your daily spending, and set budgeting goals.
#2 Opt For Loan Restructuring
Understandably, you may think that lower equated monthly installments (EMIs), which is essentially a fixed amount of money you’ve to repay banks or licensed moneylenders to pay off your loan, with higher tenure is the best option for better liquidity management. But, here’s the thing, higher EMIs to repay your personal loans from banks or licensed moneylenders translates to lower tenure. This means that you can easily repay the loan either on or before time with far fewer interests.
If this option piques your interest, then you need to evaluate and analyse which aspect is more accommodating to your situation: either obtaining liquidity by opting for lower EMIs; or save on interests by opting for higher EMIs.
#3 Identify and Prioritise Your Repayment Loans
Now that you have a clearer idea of your spending habits and set a budget in mind, it’s time to prioritise your personal loans, especially if you’ve several loans to pay off. The first step is to identify the costliest loans, interest rates, and their repayment date. In doing so, you’ll be able to monitor your repayment schedules and the amount without fearing that you’ll miss paying your dues.
It’s also prudent for you to allocate your funds primarily towards repaying loans with higher interest rates, whilst maintaining the regular payments of loans with lower interest rates. That way, you’ll minimise the total amount of interest that you’ll be required to pay and gradually eliminate higher interest amounts first.
#4 Consider Consolidating Your Loans
If you’ve several personal loans under your belt, then it’d be wise to consolidate your loans as having several loans will make your interest rates pile up and increase in the amount in the long run. But, by consolidating your loans, be it from banks or licensed moneylenders, in a single account, your repayment terms will be more streamlined, and as such, makes it that much easier for you to repay your loans.
Additionally, it’ll be even more effective if you consolidate your personal loans into secured loans. This is because secured loans are known to have longer repayment terms with low interest rests as well as high borrowing limits. In turn, you can consolidate all of your personal loans while having a longer repayment term, which helps save up money.
#5 Make Lifestyle Changes
One of the simplest means to pay off your personal loans in Singapore is by making lifestyle changes. For instance, by cutting out unnecessary spending, you’ll have more room to increase your savings as well as funds meant for your personal loan repayments.
While we understand that adopting this habit can be a little challenging in the beginning. But, once you get the hang of it, you’ll find yourself steadily generating savings and paying off your personal loans from banks or licensed moneylenders steadily.
In fact, you can start slow by shopping at places that can accommodate your budget, choosing a credit card provider with the best rebate plan, and cutting down on entertainment expenses. Assuming that you finally have more control over your finances, you may also be able to consider increasing your monthly repayment amount to help shorten your loan tenure.
It’s natural for borrowers to have the desire to repay their personal loans quickly, whilst improving or maintaining their commendable credit scores. The bottom line is this: the key to paying off your personal loan on time is discipline and proper financial management.