4 Smart Tips to Manage Multiple Loan Accounts Effectively

Knowing how to manage multiple loan accounts is not rocket science. Instead, it is about being disciplined and organised, both skills that financially independent adults need to inculcate. 

With easier and quicker access to credit, having multiple loans and credit cards is very common. But if you are unable to keep up with repayment, you may hurt your creditworthiness and your overall financial well-being. 

Effective management of all your loan accounts will help you:

• Pay on time
• Avoid late payment penalties
• Save more without straining your monthly budget

Effective Strategies to Manage Multiple Loan Accounts

Here are some ways you can be more responsible when paying off more than one debt. 

Consider Debt Consolidation

With a personal loan to consolidate debt, you can get sufficient funds to close all your loans early. This way, instead of paying multiple loan EMIs, you can merge all your debts into one. 

Not only does this reduce the net interest you need to pay but it also helps you pay only one EMI and worry about one deadline. This also helps reduce the risk of defaulting. Of course, you will need to qualify for such a loan, so ensure your income and employment match the required parameters. 

Choose a Balance Transfer

Another way to manage multiple loan accounts is by reducing the payable interest. Opting for a balance transfer can thus be a good solution. When you transfer your outstanding balance to a new lender charging a lower interest rate, you can bring down your EMIs. The surplus you save can go towards paying off your loans early. 

You can also choose a lengthier tenure to reduce your instalments even more. So, if you are finding it challenging to pay off multiple loans at the same time, go for a balance transfer. 

Pre-close Loans to Save Interest 

Pre-closing allows you to reduce your debts quickly and saves you from paying more as interest. Since you are charged interest on your outstanding principal amount, when you fully pay this amount, you don’t have to pay the interest. 

Making a lump sum payment instead of paying in EMIs across the tenure is what this strategy is all about. Pre-closing the loan may be a smart idea if you have surplus funds available. However, most lenders charge a pre-closure penalty, so check on it before you plan pre-closure. 

Use the Avalanche Method

Want to save money on interest? Instead of foreclosing, make a list of all your debts and their interest rates. Based on this, pay off the loans with the highest interest rates first. Instead of paying all of it in a lump sum, pay a little more than the EMI amount. The additional money reduces the principal amount, which results in lower interest. 

This way, you reduce your EMI every month and use the extra money towards principal repayment. You must continue the cycle until your loan with the highest interest is paid off before moving to the next high-interest loan.

In addition, here are some other smart tips that can help you manage your loans better 

• Don’t miss your EMI due date, as late payment charges may add to your financial burden
• Limit the use of credit cards until you’ve paid the loans to reduce the risk of defaults
• Prioritise paying your EMIs before credit card dues, as defaults and late payments on personal loans have a greater impact on your credit score
• Avoid borrowing a small loan to manage monthly repayments, as it can negatively affect your credit score
• Try to keep your credit utilisation ratio under 40% to improve your credit score
• Opt for auto-deduction or ask your lender to send a reminder for due dates
• Convert all your credit card bills into EMIs to simplify your repayments 
• Get additional sources of income or ask for a raise

If you’re looking to consolidate your debts, consider opting for the Fibe Instant Cash Loan. You can easily get up to ₹5 lakhs to manage your loans and other bills, cover medical emergencies and more. 

Affordable interest rates, flexible tenure options, and an app that makes repayment hassle-free are some of its advantages. Moreover, you can repay your loan without any pre-closure charges. Download our Personal Loan App or visit our website for an easy application process. 

FAQs on Managing Multiple Loans

How do you manage multiple loans?

Here is a quick review of some of the methods to manage your loans. 

• Pay off loans with the highest interest first
• Create and follow a budget 
• Consolidate your debts 
• Don’t overspend on unnecessary things  
• If you get a raise, divert the funds towards repayment 
• Follow the repayment schedule and don’t miss the due date

Does prepaying loans help when managing many loans simultaneously? 

Yes, prepayment of loans helps you reduce the principal and thus decrease your EMI or loan tenure. It helps you save on interest.