How Timely Payment of your Personal Loan can Benefit You

Taking a personal loan is a major financial commitment which you should think aloud before opting for one. The succeeding month after the loan disbursement will have an EMI date on which you need to repay the EMI to the lender. The EMIs will have to be settled every month until the principal and the interest is paid back in full. Before taking a loan, make sure that you are taking the right decision.



Debt is known to have a negative reputation of being a necessary evil as finances and expenses boom in our economy. Considering the drastic changes in the booming economy and financial policies of the country, it is imperative that people will borrow loans to meet their financial commitments. It’s imperative that EMIs are paid in full on time otherwise the borrower can not only hurt his credibility but also enter a vicious debt cycle.

Always Pay EMIs on Time

When you avail a personal loan in India, you sign an agreement which makes you liable to pay your EMIs on time. Let’s see what happens when you pay EMIs on time:

1- Elevation in Credit-Rating

When the repayment of a personal loan is done on time, it boosts your credit rating as an individual and also shows your sense of responsibility and credibility in society. The boost in your credit score will help you secure loans in future.

All financial institutions report late payment or nonpayment to credit information bureaus like CIBIL. In other words, every action is recorded and reported. For instance, your CIBIL report is taken into consideration by all financial institutions to approve your loan application. Conclusively, it is a prominent factor that is used in the decision-making of your future.

2- Financial Stability

A loan is a liability only if you make it one. In other words, if you are regular with your payments - personal loan will not disrupt your monetary health. It will not raise your expenses and help maintain the financial balance diligently. For financial services institutions, timely repayment of EMIs indicates your financial stability which is a vital factor in the loan approval process.

3-  Good Credit Score = Credible Reputation

Timely payments result in accredited reputation! Regular repayment will boost your credit score and image tremendously while speaking of you as a responsible citizen. It is also bound to enhance your relationship with the bank which can benefit you in many ways in the forthcoming future.

Apart from financial matters, credit scores may also influence important decisions like background checks for critical jobs. In such situations, it is highly likely that your shining credit score is taken into consideration alongside your caliber.

4- Eligibility for Bigger Loans

Your past experiences with money determine your capabilities as a person. If you have repaid your loan during the tenure or on time, it will have a significant impact when you apply for a slightly bigger amount of money in the future. Similarly, if you have evidently failed to make payments from within or past the tenure period - you encounter penalties and a deducing credit score.

5- You Save on a lot of Money

Interest refers to the additive amount that needs to be paid so as during the repayment of an acquired loan. So, if you prepay or repay on time; it helps you to save on the interest charges and penalty fees as you have already paid off your debt on time. Sometimes, the penalties can be quite significant and can leave a dent on your finances.

6-  Debt to Income Ratio

Your attitude towards the loan repayment sets an image of you as a borrower. Vendors are always aware of your monetary settlement patterns - reason being they try their best to ensure that your outstanding dues don’t consummate your entire monthly income. To serve the purpose, “debt to income ratio” is also used by many lenders so as to calculate a percentage of your income that can be devoted to repayment.

7- Content State of Mind

No outstanding dues will obviously give you a stress-free mindset. It is highly essential in today’s time as we are so foregrounded about other things in life that finance is one department where security is important.


The 7 benefits listed above will help you understand that opportune and punctual payment of your personal loan can not only benefit you in umpteen ways but also help you grow. It is essential for your individualistic betterment. It offers you an opportunity to root for a flexible and appropriate tenure and lower-than-average interest rates for future loans. You can reap the many advantages of repaying the loan and your dues timely only if a dynamically well-organized financial budgeting plan is put into execution.
How Timely Payment of your Personal Loan can Benefit You How Timely Payment of your Personal Loan can Benefit You Reviewed by Pravesh Kumar Maurya on 10:40 Rating: 5

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