Just secured a loan. Congratulations to you are in order! Whether for business or personal reasons, a capital injection brings you one step closer to accomplishing your goals. However, securing financing is just one half of the equation, as it still needs to be repaid.
We often find ourselves caught up with deadlines and unpaid monthly installments. Keep in mind that you have a monthly interest rate and repayment period you are required to work with.
Now more than ever you need to remain conscious and agile in how you manage your finances. These four tips will equip you with proper habits on how to manage loans.
1. Create a Monthly Budget.
Have you ever heard one of your friends or colleagues say, ‘’there is too much month at the end of this money?’’
Knowing how much you earn every month; you can create a budget that tells your money where to go. This will allow you to track and monitor all your expenses.
List your top priorities for the month with the loan installment amount being among them. This will help you remain on top of your loan repayment schedule as each amount will be foreseen and accounted for.
The biggest challenge here is sticking to the budget but when you hack it, you become a guru at managing finances.
2. Pay extra whenever you can.
Top up your monthly repayments whenever you get a little extra cash. Most loan vendors allow paying more than the stipulated amount for each installment.
This way you get to reduce your loan repayment period and end up saving more money.
3. Pay at the required time.
You do not want to default on a payment, trust me.
Not paying your loan installment on time damages your credit score, which is a measure of your credit worthiness. A good credit score helps you gain financing faster and at favorable terms.
However, a poor credit score affects your prospects when seeking financing.
Your potential loan provider will tell what kind of relationship you had with your previous financier. Consequently, giving you a bad rep and reducing their certainty that you will repay the loan without any issues.
Pro tip: Set a monthly reminder or alarm a couple of days before every installment is due.
4. Maintain a close relationship with your loan provider.
Believe it or not, your capital financer can be your best friend in case of emergencies.
Normally when the borrower knows that they are about to default a payment, they often go silent. They act dodgy and try hiding when their relationship manager tries reaching out to them.
Most loan providers describe this as a very irrational and extreme reaction to the situation.
Instead, they advise on explaining your situation to your relationship officer for negotiation. They will then present to you the available options and the way forward. This approach is good in maintaining a trusting, friendly and smooth relationship between both parties.
How To Manage Your Loans: Conclusion
A loan is meant to open you to possibilities. It is also a responsibility you have accepted to add on in your life. The above 4 tips, if taken into consideration, will give you a boost in learning how to manage your loans.
You will find yourself making early payments, avoiding the defaulters list, and still managing to remain financially affluent. Better get started.
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