Opting for a CA loan is one of the easiest ways for CAs to take care of all their personal financial needs. Self-employed CAs who are looking forward to opening their own firms, or experienced and established CAs who are looking for ways of further expanding their firm may opt for these loans. Of course, whether there is a wedding in the family or one is planning for that long awaited trip, such loans are helpful to meet those requirements as well. However, before one applies for a loan, a CA should also look into the ways in which they would be repaying their loans through EMIs and a good payback plan should be in place to do so. Or else, not paying the loan on time could result in defaults and penalties which would adversely affect the credit score and change the loan into a liability. Here are some ways through which one could manage the CA loan EMIs smartly.
- If income allows, it would be a good idea to pay more towards EMIs than the required amount to reduce the total amount paid towards interest in the long run. If one could only just cut down on secondary expenses for a period of time and pay off the EMIs in larger amounts, it would mean the loan would be paid off in a shorter tenure and one would end up paying much less in the long run, with interest and principal combined. If the firm is doing well, then one can always use the profits to pay off the loan faster through greater EMIs.
- There is a reason why most banks and NBFCs have CA loan EMI calculators and one should make use of them before applying for the loan. These calculators will calculate the exact EMI amount based on the information fed into it like the principal amount of the loan, the expected loan tenure, the monthly expenses, any other sources of income and daily expense requirements. Once the calculator gives the amount, a CA would be able to set aside the amount each month for loan repayment without causing financial worries in other areas of life.
- One could also opt for pre-payment options and many banks and NBFCs like Bajaj Finserv do have that offer for their clients. This means one would be settling an installment before it is due. Over time, with increased pre-payments, one could significantly reduce the interests paid in the long run and also bring down the loan tenure. One just has to manage their finances to save enough to make those pre-payments from time to time and over time, the CA loan would be paid off faster, costing the CA much less than anticipated. Some banks and NBFCs do not even charge pre-payment charges.
- One should always keep some amount aside to pay for the EMIs. It is a good idea to set aside at least an amount equivalent to three months EMIs as a buffer for situations where one has to meet sudden expenses in some other areas of life. What if there is a medical emergency in the family? Meeting those hospital bills could mean the CA missing out on the EMIs and he could risk becoming a defaulter. However, the buffer amount set aside would help tide over the situation without any major difficulties.
It is, however, true that EMIs can be paid in larger amounts of prepayments can be made only when there is excess money to spare and considering all the other aspects, this might not always be possible. However, one should at least plan to make the basic EMI payments on time, and then later maybe, if the financial situation allows, these pointers could be implemented to pay off the loan faster.
