Taking an instant personal loan sometimes becomes necessary if you are faced with an urgent financial situation. Repaying it is simple as well, and the loan is repaid quicker because its tenure is shorter than that of secured loans. But suppose you have a quick loan as well as other loans to your name. You must get out of debt fast to prevent burdening your income – here’s how:
#1 Put your savings to use, NOW!
Yes, your savings are meant for a rainy day, but the money is just sitting in the bank and you could use it to close a debt (or two). Besides, you can create new savings afresh from your monthly income, but keeping debt for months and years can take a toll on your reserves. Remove high interest debt from the mix by repaying it from your savings. Besides, your savings are better placed to help you get out of debt than to sit in the bank account earning low interest every year.
#2 Pre-pay periodically to reduce the loan tenure.
The easiest way to repay an instant personal loan is to settle it via monthly EMIs. The EMI is auto-debited every month from your bank account, so you don’t need to put in special efforts to repay the money. However, the EMI model is also the slowest way to repay the loan, and it costs you a fair bit of money by way of interest payments. Instead of repaying the loan solely via EMIs, make periodic pre-payments to lower the principal borrowing. When the principal is reduced, the loan can be restructured to a lower EMI. The loan tenure also reduces, thus helping you become debt-free faster.
#3 Monetise or sell assets that you don’t need, to repay loans.
Do you own any assets that are currently not in use? Say, an extra room in your house that you can rent out to holidayers, or a laptop that you can refurbish and sell for a good amount of money? Or there could be an investment that is about to mature, and which you were considering renewing – why not divert the funds towards repaying your loans? Monetising assets you don’t need can generate additional funds that can close your quick loan and other debt.
#4 Get a side hustle going.
Every person has a skill or talent that they can teach others or earn a second income from. You might have a diploma in nutrition, or be a certified Zumba instructor. Or you might be an expert baker who can sell their products on order. Whatever your talent or passion, do tap into it to create a valuable income stream that repays debt. Who knows, it could even replace your primary source of income!
There are ways to get out of debt sooner rather than later, as the points mentioned in the above article illustrate.