As per a survey, 67% of all Indians take out loans from time to time to meet essential financial obligations. Such expenses include utility bills, medical expenses, tours and travels, tuition fees, home renovations, etc. So, two out of three individuals in India take loans. When you apply for a personal loan online and get the requested money, the bank divides the entire loan into small EMIs. You have to ensure the timely repayment of all EMIs. It helps you in several ways and makes your profile stronger. Let’s discuss the main benefits of paying EMIs at the right time.
A Good Relationship With Banks And Financial Organizations
We take different loans at regular intervals when we have a shortage of funds throughout our life, but there are some urgent financial commitments. When you submit your application for instant loan online, bank executives will look at your profile and see your performance when it comes to EMI repayment. Paying the loan EMIs at the right time is considered a good habit in the financial world. It strengthens your relationship with banks and financial organizations to a great extent. They trust your promise to ensure timely loan repayment and approve your application for personal loans in the future.
Good Credit Score
In today’s modern and expensive world, financially literate people understand the importance of having good credit scores(700-900). A person with an excellent credit score is considered financially stable and responsible. On the other hand, individuals with bad credit scores have no reputation in society. Traditional banks and financial organisations often quash their applications for new loans fearing non-repayment of the borrowed money. Remember that timely repayment of loan EMIs helps strengthen your credit score remarkably. You can take the desired loan without facing tough questions from banks and financial organisations with a good credit score.
You Stay Away From Penalties And Fines.
The bank will never hesitate to impose heavy late fines and penalties if you don’t pay back the loan EMI at the right time. Whenever the bank doesn’t get a particular EMI, its executives will send you messages to make the EMI payment as soon as possible. However, suppose you don’t respond to their call or don’t honor the loan repayment terms and conditions. In that case, the bank has no option but to apply penalties against you, hire a debt collection agency to recover the unpaid loan amount, block your profile for future consideration, and take legal actions against you. Timely repayment of loan EMIs keeps you aloof from all these troubles and helps you lead a peaceful financial life.
The Bank Will Approve Your Application For Top-Up Personal Loans.
All regular credit borrowers are impressed with top-up personal loans’ valuable features and characteristics. However, it often happens that you have already taken a loan and then use all the received money to meet essential financial obligations. Despite this, you still need some cash to meet unavoidable financial commitments that appear suddenly. Therefore, you won’t like to apply for a personal loan separately when you need money urgently.
At this time, top-up personal loans are quite helpful as the bank already has your details in its database. Its executives can verify the available credentials and approve your application for top-up personal loans in a quick time. Always keep in mind that the bank will check your income status, prepayment potential, the need for additional money, and credit score before approving your application for top-up personal loans.
Therefore you must pay all EMIs of the loan at the right time. Just request the banker to activate an automated repayment system on your bank account. Then, the loan EMI will get deducted from your bank account along with all applicable fees at the right time and date. In addition, you get SMS and email notifications for the successful repayment of loan EMIs.
A Warm Welcome In The Traditional Banking Sector
Despite the emergence of peer-to-peer lending services, instant loan providers, and loan apps, many people are still connected with the traditional banking sector in India. Of course, modern loan arrangements help people get the much-needed funds quickly and without getting involved in complicated formalities. Nevertheless, we cannot rule out the benefits of the traditional banking system, which offers loans to individuals with reasonable terms and conditions and affordable interest fees. People with good credit scores are always welcome in the formal banking sector. However, it is possible only when you repay the loan EMIs timely.
Attractive Offers of Personal Loans
While applying for instant personal loans online, individuals love to go through the details of different offers and choose the most suitable loan package. If the bank comes to know that you have decent income every month, pay the loan EMI at the right time, and maintain a good credit score, they will make several offers ( of online personal loans). So, paying the loan EMIs helps you get the right loan package in the future.
You Can Quickly Get A Credit Card With Timely EMI Payment.
It wouldn’t be wrong to say that the availability of credit cards sometimes works as a lifesaver for many individuals. You have to fulfils multiple financial obligations with a limited salary every month. You can arrange the much-needed money with the help of a credit card and keep your life going as usual when all your cash and monthly payment are gone. But, the bank will provide you a credit card only when they know that you regularly pay the existing loan EMI at the right time. If there are several cases of delinquencies, late payments, skipping EMIs knowingly, then the bank will reject your application for a credit card. So, pay the loan EMI at the right time and comfortably get a credit card from any bank and financial organisation.
It’s Time To Boost Your Knowledge: How The Bank Determines The Loan EMI?
The loan EMI is a breakup of a loan in small instalments. Various factors play an essential role in determining loan EMI when applying for personal loans online. Let’s have a look at some vital factors in detailed hair below.
The Requested Loan Amount
Due to the increased standard in India, people need a lot of money to meet multiple financial applications in daily life. Moreover, sometimes our income is affected due to unforeseen events such as the financial crisis in the country, economic turmoil, hyperinflation, increased demand for particular goods and services, etc. That is why a large number of individuals in India take different loans. They want to get the maximum loan amount to meet multiple financial obligations without any difficulty.
The more amount you demand from the bank as a loan, the higher the EMI payment will be. Under the provision of personal loans, eligible borrowers can get funds from ₹50,000-₹4000000 for all unavoidable financial needs. The bank will look at your overall income and savings to give you the exact loan amount that you can afford and repay without any problem. It would help if you used the loan EMI calculator to see the overall cost of taking a loan and make a proper decision accordingly.
Your Overall Income And Current Financial Condition
Today it’s always easier to pay the EMI loan using an automated repayment system. The EMI payment is automatically deducted once the salary is credited to your bank account. That is why bank executives look at your current income status and overall expenditures to determine the loan amount and EMI instalments.
Interest rates of the loan money also have a role in determining EMIs. If the interest rate is higher, you will have to pay a considerable sum of money as a loan EMI every month. On the other hand, if you choose a loan with a reasonable interest fee, then EMI payments will be lower. That is why experts recommend borrowers must carefully research different offers of personal loans available in the market and get more information about their interest rates.
Loan Repayment Tenure
Loan repayment tenure also affects the size of EMI amounts. For example, if you take a personal loan for five years, naturally EMI amount per month will be low. However, if you take online personal loans for a short period, EMI payments will be higher.
How To Repay The Loan EMIs Successfully At The Right Time?
Taking a personal loan and repaying all its EMIs at the right time is your responsibility. However, it would help if you didn’t default on loan EMI repayment as it has a devastating effect on your financial life and overall credit score. Here are some tips that will help you ensure the loan EMI’s timely repayment every month.
Merge All Your Loans
Many people find it extremely difficult to repay the EMIs of different loans to various banks. For example, suppose you mistakenly miss the EMI of a particular loan. In that case, it not only spoils your credit scores but also compels law enforcement agencies to take legal action against you. Therefore, it would be pretty helpful if you merged all loans. This process is called debt consolidation. First, you need to raise a request for it, and the bank will start the formal proceedings of debt consolidation. Then, just look at the terms and conditions of the new agreement for loan repayment and sign it. Once all your loans are combined, it becomes easier to repay the borrowed money.
Unsubscribe From Unnecessary Premium Services
These days, individuals use many premium services to increase the overall standard and quality of life. When you take a loan, exercise financial discipline as far as possible. If possible, unsubscribe from unnecessary premium services without which you can live. For example, the premium subscription to Netflix and Amazon Prime, buying more than one newspaper. Doing so will help you save a small amount of money every month and ensure the availability of enough cash for EMI payments.
Increase The EMI Payment When Your Income Increases
After the onslaught of the covid-19 pandemic, many individuals have understood the benefit of having more than one income source. That is why they try to increase their income from different sources. When your income increases, you should increase the EMI amount. It will help you to repay the loan even before its maturity period. It not only strengthens your credit score but also allows you to lead a trouble-free financial life. After repaying the loan entirely, you can use your resources for more valuable purposes, purchase properties, travel to foreign countries, and perform other tasks without worrying about the loan and EMIs.
Make A Separate Budget For EMI Repayment.
It would help a lot if you make a separate budget for EMI repayment and ensure the availability of enough balance in the bank account. Prepare a schedule to deposit the EMI amount in the bank account used for loan repayment. Deposit the required amount in the bank account once you get your salary from your employer. This will help you repay all EMIs at the right time every month and learn the art of living with a limited remaining amount.
It is always essential to repay all loan EMIs at the right time. It helps you maintain a good credit score, enjoy an amicable relationship with the banker, and keep your options open for future loan applications. By following the tips mentioned above, you can quickly repair the borrowed money in a small instalment without facing any problems. You should take the loan amount under your budget. Before taking a personal loan online for emergency expenses, calculate its monthly, quarterly, and yearly EMIs.