Tips for Managing Your Personal Loan with a Loan Bank Account

Taking a personal loan is like getting the keys to your dream car—exciting but requires responsibility. Without prudent planning, it can deviate from your goals and hit your finances hard. However, by leveraging a loan account strategically, you can cruise smoothly towards your financial goals.
This comprehensive guide shares tips to effectively manage your loan repayment and maintain a healthy credit profile.
8 Tips to Manage Your Personal Loan
Here are some practical tips to help you effectively manage your personal loan and stay financially disciplined.
1. Understand the Loan Terms Thoroughly
Before obtaining a personal loan, study the terms and conditions to avoid surprises later. Key things to review:
- Interest rate: Fixed or floating and implications
- Processing fees and other charges
- Foreclosure charges in case of prepayment
- Tenure and EMI amount
For instance, IDFC FIRST offers fixed and floating interest rate options on personal loans. While fixed rates provide consistency, floating rates can work better when interest rates fall.
2. Opt for a Loan Account
Opening a loan account with your bank like IDFC FIRST Bank helps simplify loan management. It enables easy tracking, faster disbursals, and flexibility in part-prepayments. Key benefits include:
- Single account for all loan transactions
- Track outstanding loans, EMIs, payments, etc.
- Flexibility to pay ahead and save on interest
- Faster processing for top-up loans
3. Automate Repayments
Enabling auto-debit from your bank account is a wise choice. This ensures loan EMIs are paid on time, avoiding late payment charges or a negative impact on your credit score.
4. Prepay Smartly to Save Interest
Most personal loans allow part-prepayments, allowing you to:
- Pay lump sum amounts anytime
- Reduce loan tenure or EMI burden
- Save significantly on interest costs
For instance, IDFC FIRST offers one of the most flexible policies, unlimited prepayments without charges. You can reschedule tenure or EMIs anytime at your convenience.
Strategically prepay during occasions like bonuses or festivals to accelerate debt clearance.
5. Use a Loan Top-up Instead of Another Loan
When facing a financial crunch, avoid taking a second loan. Instead, use the loan top-up facility via your existing loan account. Benefits include:
- Better rate than a new loan
- Avoid additional processing fee
- Consolidated repayment
- Simplified account management
You can quickly open an active loan bank account in just two clicks. This helps meet temporary needs without loan hopping.
6. Maintain a Good Credit Score
As your credit score impacts loan interest rates offered, maintain a good credit score. Tips include:
- No defaults or delays in existing loans
- Use less than 30% of credit card limits
- Limit loan enquiries to needed ones
Also, having an active loan account positively reflects on creditworthiness.
7. Claim Tax Benefits
The income tax laws allow tax deductions up to Rs 2 lakhs per year under Section 80C and 24B towards loan principal and interest payments.
To claim, submit proof of loan account statements, loan provider interest certificates, and income tax returns. This deduction considerably reduces your net interest outgo.
8. Monitor Regularly
Keep tabs on your loan account often via netbanking or mobile app rather than year-end. This helps you:
- Track amortisation and outstanding reducing
- Ensure auto-debits happen smoothly
- Detect issues early for quick resolution
For instance, IDFC FIRST offers a mobile app that allows real-time access to loan accounts. You can check mini-statements, repayments, charges, and account details 24/7.
Conclusion
As per the above tips, staying on top of your loan account will ensure you face no surprises or hiccups in your repayment journey. Loan providers like IDFC FIRST loan accounts offer leverage facilities to simplify capital repayment. Empower yourself by making the loan work for you through prudent management.