From qualifying for the varying sets of eligibility criteria of different lenders like Yes bank personal loan, choosing the right lender, to finally getting the personal loan application accepted and sanctioned, there are multiple crucial steps involved in availing a personal loan. And once the loan gets sanctioned, it’s natural and imperative for borrowers to breathe a sigh of relief.

However, it’s equally important to handle the loan repayment smartly to ensure that any missteps do not adversely impact their financial future. To help you towards the same, here are smart moves to manage your personal loan EMI’s repayment-

Avoid irregularities in personal loan EMI payments

While servicing your loan, develop the habit of ensuring timely repayment of EMIs on a regular basis. As disciplined and regular repayments of your EMIs and credit card bills reflect positively in your credit report, this contributes to building and maintaining a good credit score. Possessing a good credit score can enable the borrowers not only to have higher loan eligibility and approval chances but also fetch them lower Yes bank personal loan interest rates as well as better service terms.  On the flip side, committing any irregularities in loan repayment can pull down your credit score, thereby reducing your future loan eligibility.

Opt for a balance transfer to lower interest cost whenever it’s feasible

Availing the personal loan balance transfer option allows borrowers to transfer their existing loan to another lender at a lower interest rate subject to the varying criterion amongst lenders like Yes bank personal loan eligibility vis-a-vis other banks. This helps in reducing their overall interest cost as well as EMI burden. Hence, existing loan borrowers having significant residual loan tenure should periodically compare the interest rates charged on their existing loan vis-a-vis those offered by other lenders. With Yes bank personal loan interest rate being one of the lowest amongst private banks, ensure to compare the rates of other banks with it in order to strike the best deal with the most suitable lender for you.

If the personal loan interest rates offered by other lenders, including Yes bank personal loan interest rate, can lead to significant savings in your existing loan’s overall interest cost, then first enquire with your existing lender to reduce your loan’s interest rate. If the existing personal loan lender refuses to offer you a lower rate on the existing loan, then go ahead with opting for a balance transfer to switch to the lender offering the lowest interest rate. However, before moving forwards with finalizing the balance transfer option, remember to always take into consideration the applicable prepayment charges, if any, to be levied by the existing lender, and processing fee etc., possibly levied by the new lender. Go ahead with the personal loan balance transfer option only if the overall savings in interest cost significantly outweigh the associated costs. 

Prepay whenever you possess surplus money

Another aspect to be kept in mind by loan borrowers is to make prepayment or foreclosure of outstanding loans whenever they have surplus funds. Doing so can lead to significant savings in interest cost, especially if done during the initial years of the loan tenure. Therefore, when repaying your loan(s), always aim towards making loan prepayments whenever you have surplus funds. In case you are serving multiple loan repayments, always start with the prepayment of the loan charging the highest interest rate.

However, ensure to factor in the applicable prepayment charges (if any) before making a prepayment. Go through the Yes bank personal loan eligibility criterion pertaining to prepayment conditions and charges before moving forward.  Although the RBI debars lenders from levying any prepayment charges on floating rate loans just like the ones offered by Yes bank personal loan interest rate, some lenders may levy prepayment charges on fixed-rate loans. Go ahead with prepayment only if the savings in the overall interest cost significantly exceed the charges levied on making prepayments if any. 

Moreover, loan borrowers should also desist from prepaying or foreclosing their personal loan by utilizing their emergency fund or investments earmarked for crucial financial goals. Doing so can force you to avail of costlier loans to deal with financial exigencies or to achieve those crucial financial goals. While choosing amongst the asset classes of your existing investments to be redeemed for making prepayments, first redeem the surpluses parked in fixed income instruments such as fixed deposits, short-term debt funds, etc. The returns generated by these fixed income products generally tend to be lower than the interest rates charged on most loan options like a personal loan.

Include personal loan EMIs in the emergency fund

The primary purpose behind the creation and maintenance of an adequate emergency fund is to deal with unforeseen financial exigencies or income disruptions such as sudden job loss, severe illness, disability or other adverse events in life. The size of an adequate emergency fund should ideally be equal to at least six months’ unavoidable monthly expenses, such as rent, insurance premiums, EMIs etc. Hence, it becomes imperative for those repaying the existing loan(s), especially the relatively high-cost ones like Yes bank personal loan, to include the EMIs equivalent to at least six months in their emergency fund. This enables borrowers to continue repayment of their EMIs even during exigencies, too, hence saving themselves from incurring late payment penalties, increased interest cost and adverse impact on credit score due to irregularities in loan repayment.

Review your credit report & history from time to time

Your credit report summarizes the list of your various loan and credit card-related activities, as reported by the lenders and credit card issuers. The credit bureaus then calculate your credit score based on this listed information. Thus, the presence of any error on the part of the lender or bureau or even fraudulent activity in your credit accounts can adversely impact your credit score. The only way to diminish this risk is by periodically fetching your credit report from time to time. You can either fetch one free credit report from each of the credit bureaus once a year, so spread the requests in such a way that you avail one free report in every quarter of the year. Remember that even when evaluating your  Yes bank personal loan eligibility, the lender would fetch your credit report from the bureau to check your creditworthiness and past repayment history in order to assess the credit risk involved in lending to you.