How Can You Manage Your Multiple Loans?

It is not uncommon for an individual to borrow various loans in India at the same time. A huge percentage of families holding home loans even hold a personal loan from lenders like HDFC personal loan, SBI, Axis Bank etc. and car loans. Many may even hold the loan on HDFC credit card, or with any other issuers. Today, there are many borrowers who have a wide range of options with various lenders providing term loans at a competitive rate of interest permitting you to obtain the loan easily and quickly.

Holding multiple loans doesn’t mean that you may end up getting submerged in debt provided you follow specific methods –

Keep it manageable – 

Initially, you must make sure that all your loan EMIs are at a specific level that will not hamper your various other financial obligations. The Thumb rule is that you must not allot over 40 percent of your disposable income to your loan EMI. Thus, maintaining a balance is of great importance here. For instance, in case your monthly earning equals Rs 30,000, then repaying 40 percent of the same would put considerable stress on your potential to manage your expenses. In case your income is Rs 2 lakh, and you do not have huge debts or dependents, you may be able to repay even Rs 1 lakh or more in the form of EMI. You simply can make use of the online loan calculator to plan out your loans to manage them.

Make timely repayments – 

Whether you make a default on a series of loans or a single loan, instant consequences are generally the same, your score will suffer. Thus, if you hold multiple loans, ensure to repay your EMIs as per the schedule. If you can avoid availing of new loans, then it will be a good move.  Going for new loans must be avoided as it may put you in a huge debt trap. In case you are facing any trouble in making the repayment of multiple loan EMIs, you may ask your lender to enhance your repayment tenure and lower your EMI proceeds.

Prioritize your personal loan EMI before the credit card dues –

It is best that you repay your personal loan EMIs first and later your credit card account as defaults and late repayments on personal loans often have a higher impact on your score than those on your credit cards. Personal loan defaults can have a considerable impact on your score, reducing it by 50 points at times. In such a scenario like this, ensure to prioritize your repayments.

Opt for debt consolidation credit option –

Availing of debt consolidation loans to consolidate all debts in a single source may be a prudent strategy to get rid of debt from distinct sources. However, debt consolidation loans are not provided by each bank lender, and you must hold a good repayment record and a good credit score to simply qualify for such a loan. Note that debt consolidation loans are generally provided by major private bank lenders. Thus, you will require checking whether the lender can provide you with one. When issuing the debt consolidation loan, lenders typically factor in various parameters like credit history length, employment stability and relation with the lender.

Make sure to pre-close your debt at a time –

Pre Closing your loans may assist you to lower your clutter. The number of loans that you have will decide how simply you can accomplish the goal. In case you only have just 2 debts, you might be able to close one of the loan accounts in just a few months. However, if you hold 3 or more, there might be a lot of loans for the pre-closure. While you might concentrate on pre-closing your loan, make sure that you close the account with the highest rate of interest first, and prioritize the loan accounts. An online loan calculator will assist you to decide just how much you can easily save by repaying the most expensive loans before the repayment tenure completion.

Keep a watch on your expenditures – 

It is best for you to watch where you are spending your money so that you can set aside your required income to repay your debts. Begin by creating a list of your expenditures and categorize them as non-essential and essential. House rent, education fees, utility bills and others are crucial expenses or requirements. Shopping for consumer durable goods, clothes etc., are your wants. Ensure to meet your major priority expenditures first and avoid low priority expenditures. Not just can you save massive amounts of money in this way but even repay your loans faster.

Avoid any additional credit card dues – 

In case you continue adding up to your card dues despite having various loan accounts, you are just adding up to your financial stress and burden. The rate of interest of credit cards is usually around 35 – 40 percent p.a. As your card debt enhances, you may be propelled to make a higher minimum repayment, leaving you with extremely little cash in your kitty for the month. It may spiral up into a bigger issue if you do not service the loan.

Avoid taking up small loans for managing the monthly repayments –

You might get tempted to avail of a small loan for repaying a single or more loans monthly and refrain from it. In place of this, spend on the other crucial things just after you repay your debts. Also, ensure to keep in mind that making an application for more loans might impact your credit score negatively.

Ending note

While holding multiple loans simultaneously isn’t a bad option and can at times be inevitable, few strategies can assist you to manage your finances better. It is prudent to repay your loans having the highest rate of interest first. Repay your loans with a higher rate of interest, a shorter tenure and zero prepayment fees first and then move on to loans having a low rate of interest and a higher repayment term. You can reside in a debt free life with a slight effort and implementing the above-mentioned strategies for efficiently managing your loans. For any query you can contact HDFC  Personal Loan Care Number.

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