5 Tips To Always Stay On Top Of Your Personal Loans

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Personal loans can be extremely beneficial when used effectively to enhance one’s quality of life. However, without a solid financial strategy, paying them off in full can become challenging and increase your risk of being blacklisted, damaging your credit score.

As such, before committing to any kind of loan, it’s vital to have a proper financial plan in place and do your best to make your payments on time or much earlier than required.

To help you develop a good repayment plan, here are four tips on how to manage your loans more effectively.

1. Know how to create and stick to budgets

Rather than just prioritising budgeting with expenses, you should first put aside a sum for your loan repayment. After all, you should keep mind that the money you have borrowed has been spent, whereas one’s expenses can still be sorted out.

One key step to budgeting is to divide one’s expenses into categories – starting with general categories instead of specific ones being ‘Groceries’, ‘Takeout’ and ‘Tea Breaks’. Keeping the categories simple help make calculation and tracking easier.

2. Pay off high-interest loans first

As much as possible, it’s recommended to avoid loans that have unreasonably high-interest rates. However, there may be times when taking such instant cash loans are the only option, such as when you’re faced with emergencies, or they’re the only way to secure essential things like a home to call your own.

If you ever have to take up such loans, make it a priority to clear them off as soon as possible. This type of strategy is commonly known as the debt avalanche method. It requires you to pay the minimum dues on your low-interest loans and use all of your remaining funds to accelerate your repayment of all your high-interest loans.

3. Automate your payments if possible

When you’re in the process of repaying a loan, you should always strive to pay your monthly dues early or at least on time. Making late payments or skipping them entirely can cause you to be blacklisted by your creditor as well as get penalised with additional fees.

And even if you still manage to pay your debt in full, your late or missed payments will still be reflected on your payment history and, ultimately, your credit score. Thus, when possible, set up a way to automate your payments whenever your monthly income arrives.

Most licensed moneylenders offer you a way to make automated payments, but if yours does not, the next best thing you can do is set up a payment cushion instead. This method entails you to pay your dues for the next or following months in advance so that in the event that you miss out on paying on time, you’ll have a buffer in place to cover for any unexpected financial shortages.

4. Refinance your loans when it’s beneficial

If refinancing helps shorten the life of your loan or either reduces its interest or minimum monthly payments, then make sure to take it as it will make the loan much easier to manage.

Also, do note that the terms of a refinance get better as your credit score improves. Thus, if your score has increased since the time you got approved for the loan, the refinancing option will, in turn, be far better than if it had remained constant.

5. Consolidate debts if necessary

Whether it’s because of unforeseen circumstances or a lapse in discipline, there will be times when paying off multiple loans on time is no longer possible. To avoid missing out on payments and incurring more debt from late fee penalties, consolidate all your loans into one with a debt consolidation loan.

Debt consolidation loans help pay off and close out all your existing loans, saving you from being penalised and diminishing the risk of harming your credit score. Once you’ve consolidated your debt, you’ll only need to focus on one loan, making it far easier to manage and repay what you owe.


Whether it’s a personal loan or some other type of loan, the fact remains that it’s important to be responsible and pay off what you owe according to the terms you’ve accepted. To guarantee that you’ll complete your repayment before or on time, have a payment strategy in mind before signing up for any loan you want to take.