5 Tips on How to Prepare your Loan Repayment PlanAbbakin
In order to secure the required outside business or personal funding you need, here are some tips on how to prepare your loan repayment plan successfully and attack your debts head on.
Individuals, entrepreneurs and organizations need to sell their projects successfully to potential investors and/or financial lenders by discussing their feasibility reports, business plan and preparing their loan applications.
For a loan borrower, it’s easy to forget about the fact that you might have some debts looming over your personal credits, business assets, or home property.
You need a plan on how to attack your debts ahead, as you start the countdown to repayments.
What is a Loan Repayment Plan?
Loan repayment plans are arrangements made by financial institutions or lenders to help borrowers manage their loan accounts.
Depending on the lenders, loan repayment plans can have distinct requirements which may result in the borrowers paying less interest over time or offer greater benefits such as loan forgiveness.
So, below are some tips on how to prepare your loan repayment plan successfully.
5Tips on How to Prepare your Loan Repayment Plan
#1. Find Your Loan Amounts
First thing first, try reaching out to your loan officer or lender and ask the right questions about any aspects of your loans that confuse you.
You need to understand the exact loan sum you’re expected to pay at the end of the day.
Make sure you’re cleared on what you owe, how long your loan period is, and what your monthly payments should look like.
#2. Create Clear Connections
Ensure you use the correct contact details in your loan application processes.
Update your contact information so you’re sure to receive your bills, transactions, phone calls and emails messages from your leading entity when necessary.
You will use the information you have received from your loan officer to seek out financial advice throughout your repayment term.
#.3 Setup Your Budget
If you’re a business, calculate all your earnings or incomes, and map out all the money coming in and going out from your financial accounts.
This could include money to your salary, rents, car payments, foods, recreation costs, transportation, daily operational costs, fuels and more.
Now, factor all your expenditures in an estimate of your loan payment, and decide how much you will be comfortable paying each month.
This will keep your spending in check and help you put out some money away, so you don’t miss the loan money once it’s time to pay.
Remember, accrued interest or service charges may capitalize at the end or added to the principal of your loan, which increase your debt.
#4. Choose the Right Repayment Periods:
Many lenders don’t just look at the size or needs of a loan; they also consider the cost of the funds and the tenor or the length of time for which the money are required.
The standard repayment for a personal or business loan could run from 1-3 years, 1-5 years, 6-10 years, and more.
In the short-term money market, rates of funds or interests are relatively lower than those on longer-term investments.
Explore the effects of different repayment periods, extra payments, and interest programs; and choose the best period that is best to you.
Also, think about utilizing resources at their best if you are visualizing a long-term borrowing.
#5. Choose a Loan Repayment Plan that has Different Structures
Many loans, whether personal, student, mortgage or business loans are repaid by using a series of payments calculated over a period of time.
Propose a repayment plan that has different structures such as:
- A line of credit – payable at your discretion but subject to renewal annually by the lender.
- Term loan – payable monthly over ___ years starting on ____ date.
If you would like to discuss loan repayment plan options or change your repayment plan. You can get more information from your loan service provider or visit their websites for loan calculator.
Loan Cost = Principal + Interest + Opportunity Cost.
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