3 Ways to close the bank loan fastly
75% of the people in the world are average income groups and poor people. They are carrying their life by adjusting the income and expense very carefully because of the small amount of income and the high expenses of life like educational, hospital, family expenses etc. In my opinion, every persons in this group have atleast one loan in his lifetime. And he is always work hard to close down the loan. Actually many of them couldn't enjoy their life because of the EMI Payment of loan. Major portion of the salary goes into the EMI payment and they didn't have the money for relaxation. Due to some of small mistakes and negligance, many have to pay extra payment of interest amount or delays the time period to close the bank loan. Its all about the calculations. Everyone work hard to make money and they value the money they had made. So no one will accept the extra payment of interest.You can check the post how to recover the interest paid on loan. I am giving you the methods to decrease interest and to close your bank loan early.
1. Pay an extra EMI in every year
Its funny while reading this and you will think that just an extra emi can do nothing in my loan. First, everyone will think like the same. As i already said, its all about calculation.I will show you the calculation on that and you get clear picture on it.
Stephen have a loan of 1000000/- and loan period is 120 months and 10% interest rate.
His emi amount = Rs.13215/- and if he pays emi correctly he needs to pay the interest of Rs.585809/- and principle Rs.1000000/- in 120 months.
If he pays an extra emi, ie; Rs. 13215/- every year, his loan will close down at 106th month and sum total of interest is Rs.512082/- that is Rs.73727/- saved by you from just an extra emi. Now you understood the power of the extra EMI. Now i can feel the expression of your face. The bank calculates the interest on your loan is based on the outstanding principle balance. So its better reduce the outstanding principle balance as much as possible.
2. Increase the 10% of EMI every year
As like the extra emi method, this is also an effective method to reduce the interest or the term of the loan. You can try either this method or the above as per your financial situation. Let me explain the method now. From the above example of Stephen, the emi amount is Rs. 13215/- and he increase the emi by its 10% every year. Then it will be Rs.14537/- of emi next year and Rs.15990/- in next year and increases like that. If he pays 10% more emi every year, he have to pay an amount of Rs.436248/- and the loan will be closed down at 84th month. He save amount of Rs.149561/- from the interest. I know this is not a small amount for the middle class family. So its good to use this method which will be a great help to common people. Actually 10% is not a big amount each year because everyone have increment in their salary, so they can adjust their emi every year. Actually 10% is just a percentage that i took for my calculation, you can adjust this increase based on the financial stability.
3. Lump sum payment
Now, after reading this article till here, you understand how bank calculates the loan interest and the 2 ways to reduce the interest amount. I repeat once more that the outstanding principle is the base for calculating the interest. So we can reduce the interest through a lump sum payment to reduce the principle balance at the initial time so that it will effect a huge difference in the interest. Now you will ask me that, how we can get a huge amount ? We don't have money but we get it if we wants to. Have you heard about chitty or Mutual Benefit Fund Scheme in Co-Operative Banks and other institutions. There is installment payments for the advance amount you get from there through lot and the benefit is you need only to pay the installment amount and there is no interest like loan. There you can reduce your loan and have a relief.
So guys, try these tricks and experience the results. In my next article, I will tell you how to recover the interest paid by you.
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