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Financial Planning For Loan Repayment

So you have decided on taking out a loan, which you think is a must for whatever requirement you have. But you are still wondering on the issues you need to handle during repayment of loans. Don't worry! We'll help you get started.

Banks are often the best places to apply for a loan especially when you need capital to invest in a worthwhile project. But it is crucial to plan before taking out a loan. Unless you a proper planning for Loan repayment, getting a loan can prove to be quite a financial disaster. Therefore, before acquiring a loan, make sure you have the required income to be able to repay the loans.

Before taking out loans, it is also important to be more aware of the reason behind taking out the loan. . For example, if you are taking a loan to invest in the stock market, it can be quite risky considering the speculative nature of forex trade. It is advisable to ease out those risks, although any business tends to be risky. Another example would be that what the point is if you are unable to repay the loan you are taking out for a car. It would be advisable to stop and think before taking out loans that your income cannot afford to manage.

When going for a loan, it is imperative to have proper loans repayment plans. See whether your monthly income can afford to service the same. Also take into attention the extra cost or penalties incurred in late payments or even early loan repayment. You also need to know the issues pertaining to repayment of loans that are likely to come up. Evaluate the risk involved carefully while borrowing and remember that several terms are negotiable in a loan agreement.

Go through the following steps to have a proper financial planning for Loan repayment:

Mode of repayment:

You will get various options for loans repayment. Go for a suitable mode and duration for repaying the loan that you are offered. You could pay in monthly installments or at a stretch. Generally, a longer period of repayment means a higher rate of interest.

Interest rates:

Although all lenders generally offer interest rates within a narrow band, for your best interest, try to bargain for the lowest interest rates. Always check with the other lenders before borrowing from one party. Find out whether the terms of the lender comply with the applicable state usury laws, especially if you are not borrowing from a bank. This will ease you a lot during repayment of loans.

Interest payment:

If you have a choice in the matter, it is best making the payments on the first of every months you have greater funds at your disposal. Make sure that the repayment dates are clearly defined in your loans repayment plans. As part of your loans repayment plans, adjust the timing of the installments in accordance with your cash inflows.

Processing fee:

A proper planning for loan repayment also includes getting a couple of assessments of loan packages from different sources. This is the fee the lender charges once you apply for the loan. Re-negotiate the terms if you find many deviations between them.

Foreclosure:

You can always request the lender to offer you with a facility for foreclosure, in case; you plan to seal off your loan account before the due date. Make sure that your loan agreement includes such a clause to protect you against or minimize any prepayment penalty.

Default:

As part of your loans repayment plans , see that your loan agreement also cover the applicable penalties in cases of default. It is advisable to settle these matters with the lender well in advance, to avoid any confusion later.

Grace period:

Generally all loans repayment agreements come with a grace period, which is for a few days after the due date.

Late fee:

Ensure sure that any late fee charged by the lender is reasonable.

Follow the above pointers while planning for Loan repayment schedule for yourself and you will be in total control of your financial destiny!


 
 
 
 
 
 
 
 
 

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