Tired of paying back loans? A few things you can do to lose weight

No matter how much money you earn, most people have nothing to lose because of debt. Some of the things that we are not paying attention to are likely to pull us back from the economic upswing. Here are a few things to keep in mind about your loans.

Repayment of loans should be given priority.

As a first step, you should prioritise repaying your loans. Make a list of all the outstanding loans. Try to pay off your debts as soon as possible. Start by paying off the most expensive loan. This will reduce your interest burden going forward.

Increase the repayment as the income increases

One of the easiest ways to pay back your loans quickly is to increase the EMI as your income increases. If a borrower gets a salary hike of 8%, he can increase his EMIs by 5%. The EMI for a 20-year home loan of Rs 20 lakh at an interest rate of 11% is Rs 20,644. The borrower has to increase about 1000 rupees every year. The impact of this modest increase should not be underestimated. Even a 5% increase in EMI ends a 20-year loan moratorium.

Use unexpected gains to repay expensive debt

If you get extra money from somewhere, use it to pay off your debt in the first place, without trying to buy the latest smartphone or TV.

Convert Credit Card Dues to EMI

Credit cards are convenient. It also gives you an interest-free credit for up to 50 days. But if you don't pay your bills on time, you're in trouble.

Use existing investments to repay debt

If you are in debt, you can use your existing investments. You can take a loan from your life insurance policy or PPF. The investor is allowed to borrow from the balance amount from the third financial year of the investment.

Consolidate

Tracking EMIs and interest rate changes can be very challenging if you have multiple loans. Failure to pay EMIs can lead to higher interest rates and lower credit score. In such a situation, consider consolidating all your debts.

Make lifestyle changes

Lifestyle changes are also required until all debts are repaid. This means cutting down on unnecessary expenses.

It's often the small things that make things worse. Such lifestyle adjustments may be necessary to ensure that your loan repayments go smoothly and you have enough money to pay off the high EMIs.