5 smart ways to repay your personal loan faster and save big
As personal loan growth slowed to 6% in Q4 FY25, down from 13% a year earlier and overall retail loan originations dipped to 5%, borrowers are becoming more cautious about managing their debt according to a recent report by the PTI.
Many are now focusing on repaying existing loans faster to reduce interest outgo and ease financial stress. In this context, closing a personal loan efficiently is just as important as taking one. If not done properly, the loan can continue accruing interest and complicate your financial planning.
Elaborating on the same, Siddharth Jain, CFO, MinEMI, says “Speeding up repayment doesn’t always need a windfall. Increasing EMIs post-appraisal, refinancing at lower rates, and using incentives for part prepayments can significantly shorten your loan term. Avoid unnecessary top-ups—the focus should be on exiting debt faster, not stretching it longer.”
Best ways to close a personal loan faster
Keeping the above factors in mind, here are five simple tips for you to close your personal loan faster:
Tip 1: Make frequent & extra payments
Switching to bi‑weekly payments can shave months off your loan term, banking an extra payment each year. On similar lines, even small extra amounts, say an additional ₹2,000 monthly can significantly reduce total interest and shorten the repayment period.
Tip 2: Use windfalls & monitor prepayment terms
Apply occasional windfalls such as bonuses, arrears, tax refunds among other similar payments directly to the loan’s principal. Still, before doing this, first check your lender’s prepayment policy to avoid penalties. Some impose charges that may surpass interest savings. That is why decide accordingly based on a clear understanding of the terms and conditions as detailed by your lender.
Tip 3: Refinance or transfer balance
Refinancing at a lower interest rate or transferring of the balance can cut interest costs and accelerate the entire process of repayment. Ensure that any refinancing fees don’t dilute the benefits. If in doubt, always discuss the entire problem with a certified financial advisor.
Tip 4: Consolidate or re-budget efficiently
Merging of several high interest debts into one helps in reducing your personal loan EMI load and simplifies tracking . Tighten non essential spending such as birthday spending, ott subscriptions, dining among other similar avoidable payments to free up cash flows for loan repayments.
Tip 5: Boost income & automate payments
You can also consider initiating side gigs or freelance work and channel extra earnings to the loan. The goal should be to aggressively clear out the borrowed funds. Automating EMI deductions also goes a long way to help avoid late payments, qualify for lender rate discounts and ensure consistency.
Why does it matter now?
With retail loan originations slowing to 5% in Q4 FY25 from 12% a year ago, and personal loan growth halving to 6%, borrowers are under growing pressure to repay effectively and within time. Financial institutions are aiming to control NPAs and bring defaults down.
That is why, taking help from professionals for guidance and closing loans faster can help ease interest burden and avoid financial strain in a complicated credit environment due to the ongoing geopolitical problems.
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