How to put an end to personal loans? Save lakhs of rupees by getting out of the interest trap, just follow these 5 secret ways!

Personal loan often seems to be a solution to emergency needs, but their high interest rates have a huge impact on the pocket. While paying EMIs, people keep paying only interest for years, but if the right strategy is adopted, then you can get out of it quickly. So we will know 5 effective and easy ways by which you can finish your loan on time.

As easy it is for everyone to take a personal loan, it is equally difficult to repay it due to its high interest rates. Personal loans is like a trap, in which once you get trapped, years go by paying EMIs and we lose a large part of our earnings in paying interest only. But if you become a little smart, then you can get out of this debt trap in time.

Yes, we will understand how to break this trap of personal loan before time and what you have to do for this. Then let's know those 5 surefire ways, by which you can save lakhs of rupees of interest by closing your personal loan early.

1-Use of bonus

Do you get a bonus from the office or have you received a lump sum amount from somewhere? So instead of spending such money, use it in the 'part-payment' of your loan. This means that apart from your regular EMI, you deposit a good amount directly in your principal amount. The advantage of this is that it reduces your principal amount, due to which either your future EMI is reduced or the loan period can be reduced.

2- Increase EMI a little every year

The smartest and most effective way to close the loan early is to increase the EMI every year. If there is an annual increase in your salary, then first of all your EMI amount should also be increased by 5% to 10%. You will not even feel the increased EMI from the salary, but it will directly affect your principal. This amount can slowly but surely make you win the race of debt.

3- Change the game with 'Balance Transfer'

Yes, if another bank is offering personal loan at a lower interest rate than your current bank, then you can choose the option of 'Loan Balance Transfer'. In this option, the new bank repays the entire loan of your old bank and your loan is shifted to the new bank at a lower interest rate. The effect of this is that your EMI burden is reduced immediately and you can save a lot of money. However, it is important to know about the processing fee before transferring.

4-Loan Foreclosure

Loan foreclosure can be called the 'Brahmastra' to get rid of debt. Foreclosure means that the account is closed by paying the entire remaining amount of the loan at once. So if you have enough money saved, then this is the best option, but some banks charge a foreclosure penalty of 1% to 5% on closing the loan before time. So find out about the charges before closing the account.

5-Why is it necessary to close the loan early?

Early repaying the loan does not only mean saving interest, but it also brings many big benefits in your life. Yes, as soon as you get freedom from debt, stress reduces and attention goes towards savings. By repaying the loan before time, the CIBIL score becomes good and it becomes easier to take a loan in the future.