Let’s use a story to explain it better. Let’s say you’re preparing to buy something major, like a new automobile or a home update. This is what you can get:
Standard Repayment (Interest + Principal): Every month, you pay a set sum that includes both the principal and the interest. A $20,000 loan with a 6% interest rate over 5 years costs around $386 a month, which is great for budgeting. Keep going!
Interest-Only Repayment: For a fixed amount of time (like 1 to 2 years), you only pay the interest, which keeps your payments modest (about $100 a month on the $20,000 loan). This is great if you don’t have a lot of money, but the principal stays the same.
Graduated Repayment: Payments start off low and go up over time, which is good for people whose incomes are going up. Good for young professionals, although the total interest costs more at first.
Balloon Payment: Small monthly payments that add up to a significant amount at the end. If you foresee a big windfall, plan for that last $5,000 to $10,000 hit!
Biweekly Repayment: Pay half of the monthly sum every two weeks. This will lower the interest and shorten the loan duration. A plan that costs $386 a month becomes $193 every two weeks, which saves you money!
Flexible Repayment: Change your payments based on how much money you have—pay more when you have a lot and less when you don’t. Great for people who don’t make a lot of money all the time, but examine the lender’s terms.
Early Repayment: Pay off the loan early without any fees (if the rate is variable). Cut down on interest costs, but make sure you have the money up front.
Which one is your friend?
It all depends on your story:
Low on cash? To make things easier, you can choose interest-only or graduated.
Need some extra cash? Paying up your loan early or biweekly lowers the interest rate and gets you out of debt sooner.
Do you have big plans? If you have a payout coming, balloon payment works.
Income that changes all the time? You are in charge with flexible repayment.
Use Srifinance.com.au to do the math and find the best deal for you, as rates will be about 6% to 7% in 2025. Your credit score (check it with Equifax) and your debt-to-income ratio also matter. For easier acceptance, maintain your debt-to-income ratio below 40%.
Why talk to Sri Finance?
You might say, “Wow, this is a lot to chew!” Sri Finance comes in at this point! We can help you with your money, whether you need a car loan or a personal loan. We’ll work with you to create a repayment plan that fits your life. Give us a call to work it out!
In conclusion
There are several different ways to pay back a personal loan, so everyone may find one that works for them. Choose the best option for you based on your budget and goals, and let Sri Finance help you. Are you ready to take charge? Get in touch with us today!
