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A loan is like an additional expenditure every single month, and the earlier any loan is dissolved, the easier it is to save money again for the respective individuals. In this blog, listed are some of the tips that can help an individual in paying off the loan faster or reduce the burden of the home loan that he or she has undertaken.
A short loan tenure makes it easy for the individual to complete the repayment process of the loan faster thus enabling you to get a lower cost for the interest. It should be noted that a higher interest payout does not mean that the interest rate is higher. With the increase in the tenure of the loan increases the interest payout.
When the loan tenure is short, the borrower can repay the principal amount faster. Owing to the interest being calculated on the outstanding principal amount, repayment of the principal amount automatically lowers the interest payout.
If you want to pay a lower interest amount, you can decrease the rate of interest of the loan. If you are already ongoing with the loan, then it would be ideal to refinance the loan at a lower rate of interest.
Make sure that you repay the principal amount quickly, because if the principal amount is less, the interest amount to be repaid will also be less.
If possible it is advised that you pay more amount than the regular EMI (in case of loans taken from banking institutions) because the extra amount will help in reducing the outstanding principal amount as well as the interest. You will need to speak with the lender to go for this step.
It is important that you choose the EMI amount that is affordable for you. You should keep in mind that a shorter loan duration will result in the lowering of the interest payout, and this may increase the burden of your EMI. Therefore affordability is an important factor when finalizing the loan EMI amount.