Troubled by the burden of EMIs?:Learn easy ways to clear loans quickly; Don’t make these 10 mistakes

Nowadays loans are easily available, but the burden of EMI (Equated Monthly Installment) becomes a ‘headache’ for some people. Often, people choose a long tenure lured by low EMI or take loans without complete information, which affects their budget for years. Without proper planning, the burden of interest keeps increasing and it becomes difficult to clear the debt. If some smart financial decisions are made, loans can be cleared quickly. Lets see what is the correct way to pay EMIs. We will also know that- Question- What is EMI and how is it determined? Answer- EMI is the fixed amount that has to be paid every month on a loan taken from a bank. It includes two things- How is EMI determined? EMI depends on three main things- What happens when tenure is changed? Question- What common mistakes do people make related to EMI? Answer- Taking a loan on EMI is easy, but these common mistakes can cause heavy losses- Question- What are the advantages and disadvantages of having a higher loan EMI? Answer- Advantages of higher loan EMI- Disadvantages Question- What are the advantages and disadvantages of lower EMI? Answer- Advantages of lower EMI- Disadvantages Question- What to do to reduce EMI burden? Answer- Understand this through the points below- 1. Keep Making Pre-payments Whenever you have extra money, deposit it as a pre-payment towards the loan. This will reduce the total interest. 2. Choose the Right Tenure Don’t choose a very long tenure while taking a loan. Maintain such a balance that the EMI is manageable and the interest doesn’t increase too much. 3. Choose a Loan with Low Interest Rate Before taking a loan, compare the interest rates of different banks and choose the option with a lower interest rate. 4. Use Balance Transfer If you’re getting lower interest elsewhere, consider transferring your loan to another bank. 5. Make a Higher Down Payment Making a higher down payment initially reduces the loan amount, which decreases the EMI burden. 6. Avoid Unnecessary EMIs Avoid taking everything on EMI and take loans only for necessary expenses. 7. Increase EMI When Income Increases When your income increases, try to finish the loan quickly by increasing EMI or prepayment. 8. Control Your Expenses Keep control over your daily expenses, so that paying EMI becomes easier and financial pressure remains low. Question- If you want to finish the loan quickly, what are the methods? Answer- For this, the most important thing is to pay EMI on time in a disciplined manner. See all methods in the graphic- Question- What is loan pre-payment and what are its benefits? Answer- Loan pre-payment means – ‘paying off a part of the loan early by paying extra money apart from the fixed EMI.’ This reduces the outstanding loan. Benefits of Pre-payment Question- Is it right to pre-pay every loan? What things should be kept in mind? Answer- No, making pre-payment is not always right for every loan. It depends on the type of loan, interest rate and financial condition. Keep these things in mind- Question- What is balance transfer and when should one take advantage of it? Answer- Balance transfer means that an existing loan is shifted from one bank to another bank, where lower interest rates or better terms are available. Understand this from the graphic- Question- Is it right to increase loan tenure to reduce EMI or not? Answer- Increasing tenure does reduce EMI, but it is not always the right decision. It depends on your needs and situation. When is it right? When is it not right? Question- If you have more than one loan, which one should be paid off first? Answer- In such a condition, adopting the right strategy is very important, so that you can get out of debt quickly. Understand this from the graphic- Question- What is the impact on credit score by paying off loan early? Answer- Understand its impact from the pointers- Question- Is paying off loans early always the right strategy? Answer- No, paying off loans early is not always necessary. It depends on financial condition and loan terms. When is it right? When is it not right?