These days, whether it is a wedding in the family or improvements to the home, personal loans are the way to go. Easily accessible for the average Indian household, loans have become a means to fulfil our dreams. Just plan for the repayment and use a personal loan payment calculator. Your loan should not add any hassle to your life.

Here are five crucial steps you must follow at the very beginning of your loan period. This will ensure that your repayment process is smooth and organised.

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1. Keep your family in the loop: It is true that the loan will be paid from your account. But the benefits of the loan and the pressure of repayment will affect your whole family. Be transparent about your repayment plan and make sure your family is on board with it.

2. Keep the tenure as low as you can: It may be tempting to go for the longest tenures because the equated monthly instalments (EMIs) are so low. But remember, the longer you stretch your loan repayment, the more you end up paying in interest. For a tenure of 20 years, the interest paid can be as high as 125% of the principle amount. This is why Swati Saxena, an HR professional, chose to repay her loan from Bajaj Finserv in just seven years. She could afford the relatively high EMI.

3. Choose a comfortable EMI: While aiming for a low tenure, try not to fix an EMI amount that eats into your lifestyle. Remember, you will have to manage on the balance of your income after EMI deduction for several years. Keep your income and normal monthly expenditure in mind when fixing upon a sum. That way, you will not feel the brunt of your loan every month. A loan repayment calculator can help you with this.

4. Insure your loan: Misfortune can visit any family at any time. So, you need to be prepared. You do not want to leave your family with a loan repayment burden in case of your untimely demise or a debilitating illness. Contingencies can happen. But you can limit their impact on your life and the lives of your loved ones by planning for loan insurance.

5. Use the prepayment option wisely: Say you come into a good amount of money through a maturing investment or a bonus from your employers. You now face a serious dilemma: Should you prepay or invest? Loan prepayment is tempting, especially when there is no penalty. You can save a huge amount of interest repayment. You also attain the peace of mind of being loan-free.

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But an ongoing loan can give you certain tax benefits as well. The best option is to determine the smallest amount that will give you the biggest tax benefit. Then prepay any amount beyond that as early as possible. For instance, Dr Abhinav Rawat had an personal loan from Bajaj Finserv. He chose to prepay 70% of the loan in the first two years of his tenure. He plans to repay the remaining amount over a tenure of five years.

But before you apply for a loan, make sure to use a personal loan repayment calculator. India is a big market for personal loans, so you should compare several options. Based on the comparison, choose the loan that is the best fit for you.

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