Rita was always orderly with her finances. The home loan she took recently was the first loan she had ever availed. She soon realised that managing the EMIs was a different ball game altogether. She was not able to manage her money and she even missed an EMI. Where did she go wrong? Well, as a new player, she was not aware of EMI survival guidelines. If you feel a little unequipped yourself, here are some tips to help you repay your EMIs without straining your finances.
1. Keep a separate account
It is a good idea to have a separate bank account for the EMIs. This is especially helpful for newbies like Rita who may not be very good at managing EMIs. With a separate account in place, paying off the EMIs will become simpler.
2. Keep a tab on your expenses
An EMI is an added financial responsibility which you must prioritise. Try to keep a tab on your other expenses and keep them at the lowest. The EMIs are bound to be a bit of an economic burden but you cannot do anything to reduce them. The way out for you is to reduce other expenses.
3. Autopay setting
Stay updated on your EMIs by setting up an autopay transfer system in your bank account. Opt for the scheduled payments so that the exact amount of money goes towards the EMI on a fixed date each month. This will make you disciplined in your EMI payments.
4. Prepay when possible
If you receive a bonus at work or inherit some money, use it to prepay your home loan. You can either pay a lump sum and close the loan or pay off a large part of the debt. You can then speak to your lender and reduce the EMIs for the remaining amount. This will make it easier for you to manage your finances.
5. Maintain a contingency fund
It is always a good idea to maintain a contingency fund. If you ever find it difficult to pay your EMIs, you can dip into the emergency fund. This will help you repay the EMIs if you ever face a challenging situation. Defaulting on EMIs is dangerous as it can decrease your credit score and harm your financial reputation. So, avoid missing an EMI by building up a contingency fund beforehand.
The bottom line
You must pay your EMIs on time. Keep the tips mentioned above in mind and you will be able to manage your finances and pay off your loan. Not only will this give you peace of mind, it will also build up a good credit history for you. This will help you out in your future monetary transactions.
