8 Personal Loan Hacks to Save Big!

Over the years, personal loans have gained widespread popularity due to their flexibility and straightforward application process. Whether it's a sudden medical expense, an urgent home repair, or a last-minute financial need for a big event like a wedding, instant personal loans provide a reliable solution during financial crunches.

Table of Content

• Pay a Sizeable Amount as a Down Payment
• Opt for a Shorter Loan Tenure
• Enable Auto-Debit of EMIs
• Consolidate Your Loans
• Opt for a Step-down EMI Plan
• Consider Balance Bank Transfer
• Consider Part Prepayment
• Negotiate for Lower Interest Rates
• Conclusion

However, it's essential to remember that borrowing money comes with the responsibility of repaying it, including interest rates. This interest is how lenders generate profit, and while it's an unavoidable aspect of taking out a loan, it doesn't mean you can't find loan hacks for saving money on that interest.

To help you save on interest and make the most of your instant personal loan, here are 8 effective hacks that will significantly reduce your financial burden:

Pay a Sizeable Amount as a Down Payment

A down payment is the upfront sum borrowers pay when securing a loan. One effective hack to save big on personal loans is to make a substantial down payment. By doing so, you reduce the principal amount you need to borrow, which not only lowers your monthly installments but also decreases the total interest you'll pay over the loan term. Additionally, a larger down payment shows your financial commitment and lowers the lender's risk, potentially leading to more favourable personal loan interest rates.

Opt for a Shorter Loan Tenure

If you are wondering how to get lower interest rates on personal loans, then opting for a shorter loan tenure is the solution. In a personal loan, the amount you borrow will have an inverse relation with the loan period. This means, that the longer tenure you opt for the smaller will be the EMI as the amount will get divided into longer tenures.

However, while a longer loan term can reduce your monthly payments, it often leads to higher interest payments overall. That’s why, if you want to save money in the long run, then you should consider shorter loan tenure.

Enable Auto-Debit of EMIs

Another hack for saving money on instant personal loans is to set up an auto-debit feature with your bank to ensure you never miss a loan payment. This way you can steer clear of late fees or penalties. Additionally, you can also round off the amount to the nearest zero, for instance, instead of paying Rs 9,500 each month, opt for Rs 10,000. The small extra amount you contribute each month will accumulate over time, leading to considerable savings by the end of your loan period.

Consolidate Your Loans

Do you have multiple loans? Is it becoming difficult to keep track of multiple loan repayments? If yes, then you can consider consolidating your loan. Consolidation is a term used when you take one loan to pay off all the other debts. This can help you possibly get lower personal loan interest rates and simplify your repayments with fewer bills to pay each month and fewer due dates to worry about.

Opt for a Step-down EMI Plan

A step-down EMI plan allows borrowers to start with higher EMIs that gradually decrease over time. By reducing the principal amount more quickly, this hack helps ease the repayment burden. It’s especially beneficial for people nearing retirement, as it helps them to pay off the loan while they still have active income sources.

To calculate your monthly EMI for a particular loan amount, consider using a personal loan EMI calculator.

Consider Balance Bank Transfer

A balance transfer allows you to transfer your loan from one lender to another. The main reason for doing this is to get a lower interest rate and an extended loan repayment tenure, which collectively results in a reduced EMI. However, before opting for a balance transfer, carefully consider the associated costs, including processing fees and foreclosure charges, to ensure that the overall financial benefits outweigh the expenses.

Consider Part Prepayment

Many lenders offer prepayment options after the borrower pays a substantial amount of the loan, typically after the first year of the loan. In this process, you pay off a portion of your loan before its maturity date. This way, you decrease the principal amount owed, leading to lower EMIs or reduced tenure depending on how you choose to restructure the loan.

Negotiate for Lower Interest Rates

Lastly, if you have a good credit score and a history of timely payments, don’t hesitate to negotiate with your lender for a lower interest rate on your existing loans. A lower rate can lead to substantial savings.

Conclusion

As we conclude, it's clear that instant personal loans can be beneficial for you, only if you handle them smartly. By implementing these eight hacks, you can maximize your savings, minimize your debt, and achieve your financial goals.

If you are looking for a personal loan with instant approval and competitive interest rates, consider Muthoot Finance. With flexible repayment plans, attractive interest rates, and easy documentation and eligibility, we are a brand you can trust. To apply for a personal loan, visit our website or your nearest Muthoot Finance branch.