Being able to make loan repayment faster, it is important to plan the loan repayment schedule in a better and effective way. In a time of cutthroat competition, the businessmen are nowadays availing business loans. Needless to say, with availing a loan for business, they are burdened with its repayment schedule.
Having said that, there are many lenders who offer flexible repayment tenure that helps in repaying business loans with much ease. This helps the business owner to take advantage of the financial facility as well as repay the loan without much stress on the finances. Nonetheless, there are times when a number of debts are running on the business owner and he finds it difficult to repay the loan.
Not paying loans on time leads to paying them off with higher interest rates. In addition, it also damages the CIBIL score. Low and negative credit score reduces the chances of getting the loan in the future. Well, there is no need to worry! Read on to know 5 easy steps that will help you get rid of the loan fast.
Make a Repayment Plan
To make all payments on time, it is important to make a repayment plan. For this, you can recollect all the bills and pending loan records – list the amounts, loans, paid EMIs and penalties as well as interests. This will help in calculating the amount paid and the pending sum. Then set up a new budget for monthly expenditure and make a plan to repay all the debts.
Action in Crisis Mode
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If you are over-burdened with unpaid and half-paid credit bills and debts, it is imperative to stop using credit cards now. Credit cards give the facility to buy things on credit. So, you must not overuse them and become a habitual spender. In the case of over-burdened, you must surrender your credit cards and stop using them. The theory says if you do not have a case for shopping or to buy unwanted stuff, the credit card must not be used.
Pay Debts with higher interests First
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Once you have a list of all the debts and ongoing debts, make it a point to pay loans with higher interest rates first. This will help in releasing out the burden and get rid of the remaining debts easily. Running on loans with higher interest rates for a long time does not make any sense at all. It is advisable to avoid such loans and pay them as early as possible.
Cut Down Expenses
The next step is to cut down on unnecessary expenses. This can be a painful task but certainly is worth suffering. To start with, make a list of unwanted expenses and then get rid of them. For instance, cut down on unnecessary shopping, use more public transport, and sell unrequired old stuff. The main idea is to stop spending on things which are not productive for business.
This will help in generating extra income every month and repaying loan faster.
Renegotiate the Terms and Conditions
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After all the auditing and planning, the last step is to renegotiate debt terms and conditions with the loan lender. They can be approached to ease interest rate or restructure EMI plan. This will help in cutting down some expense on EMI or interest.
In addition, while availing a business loan, you can also use the loan repayment calculator to calculate the EMIs that you will have to pay towards the loan account. This will help in planning the payment of loan according to the budget.