Search in Indianmoney's WealthPedia

Home Articles How to Manage Loans?

How to Manage Loans? Research Team | Posted On Saturday, September 15,2018, 05:53 PM

5.0 / 5 based on 1 User Reviews

How to Manage Loans?



You must have come across families which avail multiple loans. Families avail personal loans, car loans and home loans, all at the same time.  Availing a car, personal and home loan at the same time, could mean struggling with repayments.

It’s common to avail multiple loans as families juggle with car loans, home loans, personal loans and credit card dues. Home loans and car loans are secured loans. (Secured against your house and car). Personal loans and credit card debt is unsecured. Banks charge higher interest on unsecured loans. Try to avoid unsecured debt if possible.

Let’s take a look on how to manage loans? Want to know more on loans? We at will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

How To Manage Loans?

Taken a personal loan to go on holiday and struggling with repayments? You are not alone. Personal loans charge interest of 14-21% a year. Repaying could get difficult.

You might also have credit card dues to settle at the same time. You will definitely struggle with personal loan EMIs and credit card dues.

How to clear personal loan?

If you are repaying personal loan and credit card at the same time, pay off personal loan EMIs first. Defaulting on personal loans affects CIBIL score, more than a default on credit cards.

If you are repaying multiple loans at the same time, you might be short of money. Pay off personal loan EMIs as a default could eat up 50 points from the CIBIL score.

Let’s say you have availed a personal loan of Rs 3 Lakhs from the bank, with interest at 16% with tenure of 4 years. You have to pay personal loan EMIs of Rs 8,502. This is Rs 1,08,100 in total interest payment, across tenure of 4 years.

If you prepay the personal loan, you save on interest. You clear up that personal loan, really quickly.

Tip: The sum of all your loan repayments (EMIs on personal loan, car loan, home loan) + credit card dues should not be more than 50% of take home pay.

See Also: Get Personal Loans in Emergency Situations

Pay off credit card Debt

A credit card can bleed you dry. With credit card interest of 2-3% a month, you could land in severe debt.  Use the credit card only as a last resort and pay off dues immediately. Never make the mistake of withdrawing cash from an ATM using credit card.

Never fall for the trick of paying minimum balance on credit cards. A credit card charges interest of 24-36% a year and if you fall behind in payments, there’s a loan trap waiting.

Having 2-3 credit cards means paying higher minimum balance on each credit card. You have less money to spend on yourself.

Opt for debt consolidation loans

With a debt consolidation loan, you can clear multiple loans quickly. All debt is directed at a single source. To avail a debt consolidation loan, you need good credit history and a high credit score.

Not all banks offer debt consolidation loan and this type of loan is offered by Private Banks in India. If you are stuck with multiple loans and the bank offers a debt consolidation loan, grab the offer.

Banks check job stability (How long you have been working and years in current job), credit history (Length of credit history) and relationship with the bank, before sanctioning the debt consolidation loan.

Don’t take Additional Loans

You might be tempted to take additional loans of small amounts to manage multiple loans. Don’t do this. Availing additional loans affects credit score.

If you apply for additional loans as you repay multiple EMIs, credit score is impacted and there are an increased number of hard pulls. Hard pulls lead to rejections and credit score is negatively affected. This could mean more loan rejections in the future.

Resist the temptation to avail additional loans to cover multiple loans.

Be Wise, Get Rich.

What is your Credit Score? Get FREE Credit Score in 1 Minute!

Get Start Now!
Get It now!

This is to inform that Suvision Holdings Pvt Ltd ("") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.