Updated Trends: It has now become common to borrow money and repay it with easy installments. Such a practice has become a very common commercial transaction, but still it is always important to pay back the debt as soon as possible. Here are some reasons why a loan must be paid back as soon as possible.
1. Can borrow more – After you have repaid an outstanding loan, then one can always borrow money again, only if essential. In such a way, the money will be rotating without any further load on your expenses.
2. Less interest – The longer time you take to repay the loan, the interest too starts to increase. Repaying the loan as soon as possible will help in reducing the chances of defaults on payments.
3. More credit to draw – When moneylenders give credit to a person, they also calculate the amount of debt you are already in. So the more debt you have to pay off, the higher the chances of getting credit also decreases.
4. Make better use of money – The money that you have been paying as interest can be used in better places. If the same amount is deposited in savings account, one can earn interest.
5. Cash flow – If the debts are paid off early, the monthly installments or EMIs can also reduce.