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BouncySushi
BouncySushi
Stealth

Getting a loan soon, anxious about it

Next month I'll (26M) be taking a personal loan of 10L to pay off my family's borrowings.

  1. Any tips on managing the loan?
  2. I have a good credit score so I can get it through a national bank like HDFC, SBI, etc.
  3. Shall I pay it off in one instant in future or keep paying EMIs? I say one time payment because we plan to sell some property in future to get liquidity.
  4. Anything else I should take care of?

I have savings of around 5L and I have a stable job for next 6-12 months (it's a startup so things are lil shaky right now). I plan to find freelance projects and increase my income. But this is the first time I will be taking a formal loan so it seems like a big and long commitment.

Thanks!

21mo ago
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GroovyBoba
GroovyBoba
X (formerly Twitter)21mo

Keep paying emi and do a lump sum of the remaining amount when you have the money.

BouncySushi
BouncySushi
Stealth21mo

Isn't there a penalty or something to pay lump sum?

JumpyPotato
JumpyPotato
Freelancer21mo

Try for a govt Bank...they are easy to prepay the loan...private bank are not..

PrancingRaccoon
PrancingRaccoon
Stealth21mo

Keep paying EMI. Keep the liquidity as some emergency money. If you have extra cash laying around at the end of the month, pay more than the EMI. Small small contributions like these goes a long way in reducing overall tenure. Lastly, go for a government bank

BouncySushi
BouncySushi
Stealth21mo

That makes sense, thanks

SwirlyPretzel
SwirlyPretzel
Stealth20mo

Personal loans typically have preclosure / foreclosure charges. Things to keep in mind while taking a loan - rate of interest, processing fees, foreclosure penalty, if there are any insurance or other kind of charges (you can choose to not buy insurance).

Personal loan interest is much higher than savings / FD interest rate. So best thing to do is to pay it back as soon as possible and close the loan.

JumpyLlama
JumpyLlama
Stealth20mo

Use 4L from your savings to pay off the borrowings.

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