How To Manage personal loan repayments without Worries?
Staying on track with personal loan payments grants you peace of mind, ensure stellar credit and help avoid unnecessary late fees.
With late payments, the additional worries of paying interest rates further impact the overall well-being. Keeping track of finances is crucial whether you have a single loan or too many small debts. It would help if you had a defined plan to cater to and systematically wipe out every loan in the credit profile. If you fear draining all your income towards the loan or have skipped repayments, do not worry, you can still take the lead on your finances.
The blog here talks about this pressing concern and provides a suitable solution.
What loans may you have on your credit report?
Generally, individuals identifying the urgent requirement for cash apply for any amount up to 10000. However, the purpose and the loan terms and conditions differ as per the affordability and the loan amount. Here are some popular loans that an individual may have:
a) 1000-pound loans
Individuals use 1000-pound loans primarily for reasons like:
Bill Payment
Stationary
Child’s books
Car window pane repair
b) 5k loans
You may use 5k loans popularly for the following reasons:
- Plumbing issues
- Short-circuit repair
- Home-improvement(small)
- Medical bill payment
- Bridge rent payment
c) Loans for 10000 pounds
Anyone – students, tenants, unemployed, employed, retired, single mother, etc. may face the below issues and leverage loans for 10000 pounds for the following reasons:
- Christmas preparations/decorations/food
- Vehicle repair
- Financing University trips without a guarantor
- Debt consolidation
- Hosting a birthday party
Thus, at the portal, you can arrange the loan quickly per the requirements. If you share similar needs, do not hesitate to contact us.
Individuals having multiple loans in this form may need help to repay those timely. Let’s talk about how you can repay these without shelling out extras from your pocket.
6 Tips to Identify and Make Loan Repayments Timely
Sometimes life brings a lot of financial surprises in a single go. You may switch to a used car instead of a new car or save a down payment before heading for the mortgage. Unfortunately, things may be challenging for you presently, but it could help you get hold of the situation.
However, if you stop paying the loan, you may enter into a loan default. Your credit scores will fall. And recovering a credit score is time exhaustive. Thus, take charge of your payments and start repayments. Begin with the high amount loans like 1000-pound loans and 5k Loans. It would help reduce interest and optimize credit scores immediately. Check below for more tips for managing repayments:
1) Identify the total loans in your credit report
It is the very first step to making payments. You would only pay once you know how much you owe to the lender. Analyze your credit report for the debts. List out all the debts you have paid and unpaid. Swipe off the paid ones by contacting the credit bureau.
Identify the unpaid ones and count the total loan amount, including interest rates. You would get a defined number. If you have missed a payment recently, keep the amount flexible.
2) Set up a budget
Once you identify the total amount or the round-off one, you can easily budget for it. As mentioned above, begin by attending high-interest loans. Identify the monthly repayments and set the budget aside. Yes, you can pay the loan using a credit card but avoid doing so.
It could impact the credit score further. And if you have credit card debts, avoid doing so altogether. A budget would help you dedicate a defined amount every month. Please do not touch the amount; keep it separate from other bills and discretionary expenses. So, when the repayment day arrives, you can pay it unaffected.
3) Set up Direct Debit
If you took a 5k loan for repairing the car seats and share other liabilities like- insurance premiums, subscription costs, child school fees, etc., set up a direct debit for the debts. Amid all this, it is natural to miss certain payments. The lender will receive the respective amount directly without worries by setting auto-debit.
However, you must ensure sufficient income before arranging the direct debit. If you find it inconvenient or need it no more, you could request direct debit removal hassle-free. A direct debit ensures timely payments saving you from whopping interest.
4) Check if you qualify for DRO (Debt Relief Order)
If you qualify for a DRO, you can skip paying anything for 12 months. At the end of those 12 months, you no more own those debts. Yes, that’s surprising. The lenders cannot ask you to pay or take any action against you during the period.
However, it would help if you met the qualifying criteria to leverage the benefit:
- You owe less than £30000 in total debts
- After paying monthly living costs, you have £75 or less in your account.
- Do you live on rent or don’t own your home
- You have less than £2000 in savings and assets
- You have not leveraged DRO in 6 years
- You have lived and worked in England and Wales for three years.
Qualifying this is highly critical. Read through the fine print before proceeding with further interaction.
5) Consolidate some debts of the credit report
Consolidate these if you have too many 1000-pound loans for different purposes in your credit report. Debt consolidation is tricky with less-than-ideal credit scores, but some lenders prioritize recent financial management performance. If your credit history reveals recently paid debts or no high-interest debts lately, you may get the loan. You can easily consolidate the loans without worries. Once you do so, you will have to manage or budget for only one monthly payment. Moreover, it optimizes interest and repayments too. To qualify for this, you must have a low debt-to-income ratio, i.e., lower debts than monthly income.
6) Refinance the existing loans
Refinancing is all about switching to a lower interest. If you are halfway through repaying it, then you may benefit from it. However, there may be better options than this if you have a long time to repay the loans.
Bottom line Repaying debts timely requires planning, persistence, and consistency. Analysis and Identification work together to help ensure financial freedom. These tips would help you repay short-term loans quickly without worrying about defaults.
Ailsa Adam is the Editor-in-Chief and former content head at Hugeloanlender. She has been a valuable member of the content strategy team since 2017 due to her abundant experience in the finance sector. Passionate about helping individuals navigate the world of loans and personal finance, she has dedicated herself to acquiring extensive knowledge on various financial products. Before her role at Hugeloanlender,
Ailsa worked as a seasoned journalist and writer, specialising in creating informative blogs and articles on diverse loan types. She is known for her meticulous research and commitment to delivering accurate and engaging content. She holds a degree in MBA Finance and has a keen interest in creative writing and art.
