You may need to take out a loan for expenses such as college, home repairs, or medical emergencies. However, if you take out a large loan, such as a 5 lakh instant loan, you will also need to make regular EMI payments. Unless handled with care, such payments can be more trouble than they’re worth.
The good news is that you can manage your EMIs with the help of a few strategies without worrying too much.
In this guide, we’ll take it further and show you some budgeting strategies, a debt management process, and smart hacks for planning your finances in a way that will ensure that you stay ahead on your loan repayments. It doesn’t matter whether you’re looking for a 4000 loan or something much greater; the fundamentals of good money management are all the same.
1. The Power of Budgeting: Your First Line of Defense
The first tool is budgeting. It’s not about depriving yourself; it’s about giving every rupee a job. The first thing that you will need to do when availing of a 5 Lakh Instant Loan is to include the EMI in your budget.
- Create a Realistic Budget: First, take inventory of all sources of income. Then, enumerate all your expenses, including the fixed costs (your rent, loan EMIs, and utility bills) and variable ones (groceries, eating out, and shopping). Do your best and be honest.
- The 50/30/20 Rule: Spend 50% on needs (which includes your EMI), 30% on wants, and 20% on savings and paying off debts. Your main goal should still be to pay back the loan, but you can work toward other money goals with this plan.
- Track Your Spending: Document every single expenditure, even if only for a month. You might be surprised where your money goes. This data will help you spot those areas where you can trim down and free up money for your EMI and other savings.
Keep in mind that a budget is a living thing. Review and recalibrate it every month to ensure it aligns with your funds and simplifies the management of your 5 Lakh Instant Loan.
2. Debt Management with the Debt Snowball Method
Even if you budget to pay off loans, the debt snowball strategy is a good way to attack them, especially if you owe more than one.
The concept is simple: Pay your smallest debt first while making minimum payments on all your other debts. Once the smallest debt is paid off, you “snowball” the money you were using for that payment toward the next smallest debt. This method is based on the idea that paying off a loan in full is a psychological win that will encourage someone to keep going.
Here’s how to apply it to your loan management:
- List Your Debts: List your every debt, starting with the smallest balance, down to the largest, regardless of the interest rate.
- Pay Extra on the Smallest Debt: Take any additional money or bonuses, or money you can bridge from your budget, and pay off your smallest loan as fast as humanly possible.
- Roll It Over: When the smallest debt is gone, take the money you were paying on it plus whatever the new minimum is and apply that to your next smallest debt. This means a bigger payment and less time to pay it off.
- Repeat: Do this again and again until all of your debts are paid off.
It is a highly effective method that can help you gain momentum in feeling in control of your finances!
3. Financial Planning Hacks for a Stress-Free Future
In addition to budgeting and managing your debt, there are a few hacking tricks you can employ in order to inch closer to a stable financial situation and to feel less worried about making those loan repayments.
- Set Up Automated Payments:
- One easy way to make sure you never miss an EMI is to do this. Set up your bank to take the money out of your account on or before the due date. This will not only prevent you from getting hit with a late fee but also will help keep your credit score in good shape.
- Consider a Loan Prepayment: If you can and you are not going to get hit with a huge penalty, try to prepay the loan when you get a lump sum. A small prepayment can make a very big difference in the total interest you pay and the life of the loan. You can consider Stashfin for its flexible options to get you out of debt quicker.
- Make an emergency fund: You want your own separate emergency fund, an account that holds 3–6 months’ worth of living expenses, to act as a much-needed financial cushion and help you avoid taking out more credit.
Conclusion
Handling EMIs on a 5 Lakh Instant Loan doesn’t necessarily have to be a trauma. It is possible to master your personal finances, whether you are just getting started or have already spent years working hard, and you can do it by following intelligent budgeting principles, utilizing popular debt payoff strategies such as the debt snowball, and incorporating effortless financial tips. Begin this week, and you’ll soon discover that a debt-free life is not just a dream.
FAQs
Q1. What if I fail to make one EMI payment?
If you miss an EMI payment, it can result in late fees and a dip in your credit score. If you foresee trouble, it makes sense to reach out to your lender in advance to hash out options.
Q2. Can I get a personal loan if I have a bad credit score?
Having a credit score for personal loans in good shape is indeed necessary, but there are lenders, as in the case of online loans; however, these might come at a higher interest rate. It’s wise to boost your credit score before applying.
