The thought of having a loan, to repay can be both an overwhelming and an intimidating thought. Whether it is a personal loan or loans that you have procured to set up your business, paying it back on time is very important. This requires you to formulate a proper structure. Here are a few tips to help you create an efficient payback plan to go from thousands of rupees in debt to a debt-free, profit generating start-up.
- Understand your loans to work out a suitable repayment schedule: To work out an efficient repayment schedule, it is a good idea to first research the terms and conditions of your loan. You could also employ online repayment calculators to chalk out a thorough repayment schedule and choose one that suits you best.
- Make a budget: A budget is not just an important part of your loan repayment – it is also essential to attain complete financial independence. By creating a budget, you will be able to allocate the right amount of funds without incurring unnecessary expenditures.
- Consolidate your loans: While loan consolidation might not be a good idea for everyone, for the many of you, who find it extremely complex to handle multiple loans, it might be a good idea to consolidate your loans. This means that rather than having a number of smaller loans, you can have one big loan and one servicer making the payment of your loans much more convenient.
- Pay more than required each month: Your repayment cycle will determine the amount of money you will pay as interest for your loans. The more frequent your payments, the lesser money you will land up paying in interest. As the principal amount will be reduce so will the interest. This means that you land up saving much more money which you can invest in other business endeavors.
- Have a positive attitude: A lot of people might ignore this but paying back a loan requires a lot of determination. Up and downs are part of any business. You should not, at any point become depressed or be consumed with thoughts that you might not be able to pay the loan. Thinking that, you will be able to do it, will lead to you actually doing it.
Under any circumstances do not default on the payment of your installments. Servicers generally levy very heavy penalty if you default on the payment of your installments, which is never a good idea for any start-up. This should not again deter you from procuring loans which might be essential for the growth of your business or to save up on taxes.