Want To Save Your Existing Personal Loan Interest Outgo? Read On to Know the Best Possible Ways

A personal loan is one of the most preferred options for borrowers, and the reason for this is that there are no restrictions on the usage of its loan amount. Unlike a home loan or education loan that is meant for specific expenses, a personal loan can be used for any expense such as clearing academic bills, covering a medical emergency, buying a vehicle, and so on.

Now, while a personal loan is a great way to arrange the required funds, one also needs to ensure that the loan is affordable. A lot of borrowers are concerned with the interest rates that lenders charge. To deal with this problem, there are many effective ways in which one can save on the total personal loan interest payment. Here are 5 effective ways in which one can reduce their interest outgo:

  1. Go for a personal loan balance transfer

In many cases, it is possible that the borrower has already taken the loan before finding a better deal. This does not mean that the borrower has lost better loan terms. They can always apply for a personal loan balance transfer. This involves transferring the outstanding loan amount from one lender to another for better benefits. These benefits could not just include a lower personal loan interest rate but also a top-up loan, and a more suitable repayment tenure!

  1. Prepay your personal loan

Prepaying a personal loan can help in relieving the burden of paying the loan’s monthly instalments. The borrower can become debt-free sooner too! Also, prepaying the loan will also help in saving on the interest payments since it cuts down the total number of EMI payments.

  1. Prioritise debts as per their interest rates

It is normal to be paying off multiple debts at the same time. An individual might be paying rent, paying off a loan for a car, and also paying off EMIs for a personal loan, all at the same time. However, it is important to first give priority to paying off the loans that have the highest interest. It is always advisable to clear the high-interest loans in order to not let the interest payments of such loans keep piling on.

  1. Improve your credit score

Before approving any loan application, financial institutions will always check the credit score of their applicants. This is because a credit score indicates the financial responsibility of the applicant. If an applicant has a low credit score, it is quite likely for the lender to reject their loan application. Having a good credit score, preferably above 750, can be quite beneficial for the applicant. It is common for lenders to offer better loan deals to borrowers with good credit scores, and this could also involve a low personal loan rate.

Lastly, it is advisable to make use of a personal loan EMI calculator to understand whether the interest rate of the loan is an affordable option.