Tips to Better Manage your Personal & Top-Up Loans

Managing loans with limited income is not easy. More so if you have a personal loan along with a top-up loan. In this article, we offer you some tips on better managing both loans simultaneously:

So here are some useful tips

Do not borrow more than what you actually need, irrespective of whether it’s the base personal loan or top-up loan. Amount you borrow will decide the monthly EMI. So only take loans for which you can pay EMIs comfortably. In no case your total EMIs of the month should be more than 40% of your monthly income.

Don’t delay or miss EMIs of your original personal loan. Lenders won’t give you additional top-up loan if you are not regular with your repayments. Also, your credit score is negatively affected (in addition to imposition of late payment fine) if you don’t manage your repayments properly. This in turn will lead to increase in interest rate when you take a top-up personal loan later on.

Having to pay lower EMIs is what most people prefer. But lower EMIs means higher total interest over the life of loan. If you want to pay less interest, choose low interest rate (not much of a choice there) and shorter tenor. This means that your EMIs will be higher. But that is a small cost to pay as in the end, you save a lot of money on total interest costs.

One golden rule of managing your loans smartly is to keep reducing your outstanding amount (for both personal and top-up loans). So whenever you get access to additional surplus money that you don’t need in near term, its best to use at least a major part of it to prepay your personal loans. These loans have reducing balance interest calculations and can save significant amount of money in the long run.