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6 Ways to Repay a Personal Loan on Time

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6 Ways to Repay a Personal Loan on Time

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A personal loan can be a boon to meet the costs of short-term deficits in finances, and with a little calculation, you can effectively repay your loan smoothly and on time. For one, you can begin by using the personal loan EMI calculator to work out if you have the repayment capacity or not.

Definition of a Personal Loan

A personal loan is a loan that anyone can apply for through a bank or an NBFC (non banking financial corporation). It is typically taken to meet short-term expenses like higher education, emergency repairs, or even a vacation. Since personal loans are taken to fulfil specific short-term financial needs, the tenures of personal loans vary from a year to five years. Interest rates also vary, and these depend on the bank or financial institution from where the loan is generated. There are different types of personal loans, which you can read about here.

Repaying a personal loan

A personal loan payment may include a number of fees, besides the actual loan repayment amount and the interest on the loan. Before you avail of any personal loan, it’s a good idea to note the interest rates and EMIs according to the loan tenure. Check out this blog on ways to repay a personal loan.

6 things to bear in mind to ensure a timely repayment:

What is your loan is about?

Weighing the pros and cons of your loan requirement should help you decide if you really need to take that loan. If it’s an expense that can be covered using your savings, then maybe you should consider not taking that loan, given that personal loan interest rates are usually higher than other loan types.

Monthly budgeting

Whether you take a personal loan or not, making a monthly budget is the key to effective financial management. Use this EMI calculator to check if you’ll be able to make the repayments. 

Evaluate your spending habits

When you take a loan, to avoid defaulting on repayment, you must have adequate funds with you. To do this, you should assess your spending patterns, and if you have to cut back to repay your loan, you should do so. 

Clear off your other debt

For most of us, using credit cards is easy without considering the consequences of payments and schedules. In case you are already facing credit card debt or debt from any other source, you should clear this before taking a personal loan. A personal loan payment includes many charges you may have to incur, and if any of these are not paid in time, you stand to be burdened with even more debt. Try clearing off the debt with the highest interest rate first. 

Make a repayment schedule

Defaults on loan repayments simply happen because people don’t remember to pay off the EMI on the allotted date. This incurs a penalty, and charges may mount over time. To prevent this, you can instruct your bank or any lender to debit EMIs on a specific date every month directly. If you are salaried, this should not be too much of a challenge. Nonetheless, you should be aware that there are enough funds in your account on the date of personal loan repayment. 

Repay the Loan Before the Tenure Ends

Although certain charges are levied for loan repayment before your loan tenure ends, if these are negligible to you, it is best to repay your loan as soon as possible. Check these charges before you decide on a lender, as they should not eat into your loan amount in the first place. Additionally, in case you come into some extra funds before the tenure of your loan ends, like a salary hike or bonus, you can use it to pay off your loan or a substantial part. Repayment of a portion of your loan before the tenure ends minimises EMIs and decreases the risk of becoming a defaulter. 


Paying off a loan on time is as much about the means as it is about discipline. Before you take a loan make sure you do the math to ensure you have the funds to pay it off. Personal loans are generally higher interest loans, and not paying them off in time can amount to huge penalties. On Fi Money, you can set reminders to ensure you never miss a repayment. 

Frequently asked questions

What is the repayment period for personal loans?

The repayment period for any personal loan varies from lender to lender, and it depends on your loan amount. Nonetheless, typically, personal loans are availed to fulfill financial deficits for the short term. Hence, some personal loans have common tenures of 12 months to 60 months. 

Is it good to repay a personal loan early? 

It is certainly good to repay a personal loan early if you have the funds to do so. However, early loan repayment, before the tenure of your personal loan ends, means that your lender may charge you a fee for foreclosure. This fee varies between lenders, and you may not wish to pay it if it is on the higher side. It’s worth your while to check the foreclosure charge before you take a personal loan.

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