A lot of things go around the mind of the borrower. One of these could be the possibility of returning the personal loan amount that has remained unused. Maybe they are not sure about the amount they quoted.
For a safer approach, you might think of asking for a bigger amount. This is to ensure that you do not slip into a cash shortage situation even after borrowing. Retrospection is not a bad idea but you are dealing with loans.
You are liable to pay an interest that would vary depending on the loan amount you borrow. Thus, if you take out an amount, i.e., more than what you need, you will still have to pay interest. This comes down to the fact that you will spend extra money even for the additional cash you have borrowed.
It does not matter if you are able to utilise that amount or not. At the time of loan repayment, you will have to cover that amount as well. Thus, you have to pay money for the money that you have not used.
To keep such situations away, it is advisable to look for options like small personal loans. You can obtain a loan amount according to the trivial need without surpassing your financial limit.
However, if you already have a surplus amount remaining after usage, you might be wondering what to do with that. Find out by reading through this blog.
Is it possible to return any unused personal loan money?
Well, it will completely depend on how you go ahead with the thing. Usually, the loan money should be such an amount that suffice your necessities. At times, you realise that some portion of the borrowed amount will remain untouched.
Then, you try to determine if it can be returned to the source. Before that, you must understand when such things can happen.
- Over-calculated your payouts
You have chased the maximum extent your payouts can go. This means you have considered the biggest possible amount you would need. You have simply overlooked the figure that closely matches your requirements.
Maybe, you have added extra charges of due bills that gets waved off once you pay them off on time. You have exaggerated the expenses which is not necessary as you are getting loans.
- Budgeted efficiently
You have borrowed the amount but started pursuing a frugal lifestyle. This has changed the way you have been spending money. You have made savings which you are also utilise besides the loan amount.
Because of this reason, some amount from the loan has remained. This is the result of effective budgeting which you have tried after applying for loans.
What can you do to return the unused personal loan amount?
There is no point in keeping the loan amount with you as it will keep attracting more interest. This way, the ultimate amount that you will have to return will grow in size. It can go up to such an extent that repaying might become impossible for you.
To avoid such occurrence, you can try out a few steps so that the loan debt should not increase beyond your financial capacity.
1. Talk to the lender
You should ask the loan provider if there is some provision to return the loan money that is not going to be used. They can guide you on this as rules and regulations of borrowing have been set according to them.
Some lenders might allow you to do this while others might disappoint you. However, what you must do in this situation can be figured out after talking to them only.
2. Prepay the loan debt you are supposed to cover
What has remained with you is a portion of the principal amount. Interest rates will add up to repaying loans. Thus, you will have to pay an elevated amount.
Thus, when you are talking about returning the remaining amount, it does not include the interest. Before planning to pre-pay loans, check with your lender about extra charges. Some of them might levy an additional fee for pre-payment.
Moreover, pre-paying would mean you should be able to keep the amount to be repaid ready by your side. It can be a significant amount but you will get to see some reduction in the interest rates. This is the biggest benefit of pre-paying given your lender does not impose extra fees.
3. Invest smartly
Usually, loans should never be utilised for investment purposes. However, since you have some amount left from the loan, investing it smartly can help you repay debts and earn additional money. Before taking this route, check the available investment avenues.
Make sure that the scheme that you choose should bring out great returns. This is possible only when you can find out the right scheme. Forget about investing if the possibility of getting desired returns are almost zero.
4. Use the remaining amount in other ways
Go through your financial profile to see if some bills are still pending. If the outstanding amount matches the remaining loan amount, utilise it right away. With personal loans, you get the liberty to utilise the loan money in multiple ways.
Check if the bill you are supposed to pay can give you relief from the burden of additional fees. When you cannot return the loan directly, you must utilise it to downsize the requirement of further borrowing.
Use of the remaining amount of loan can discard any upcoming necessity for borrowing. If you have confusion regarding the purpose, it would be better for you to discuss the matter with the lender.
5. Avoid doing anything that can grow your debt
Seeing the additional amount lying idle in your bank account some weird ideas might hit your mind. Do not pay attention to them as they might invite new complications for you in future. One such idea would be to utilise the loan amount for vacation.
Now, to go to some place for a holiday will demand a huge investment from your end. However, the loan amount that has been left after utilisation is not supposed to be a big amount. To plug the funding gap, you might think of getting another loan.
Nothing more disastrous than this can happen to your finances. You have an active loan payment going on and you want to borrow more. Thus, the idle amount in your bank account has triggered this urge to utilisation.
Clearly, here, one loan amount is attracting another amount. Thus, to make the best use of the remaining loan amount, you are planning to get another loan. Safeguard yourself from such aspects by sticking to the plan of returning the remaining amount to the lender.
You should try to save the amount along with your savings if returning is not possible. This step will protect the amount from attracting interest.
The bottom line
You can prevent yourself from getting into such a situation by estimating your requirements accurately. Obviously, when your necessities are significant, you should not choose unsecured personal loans with no guarantor facility. These loans are not equipped to fulfil any substantial need.
Thus, you must borrow a secured loan which will require you to pledge assets. This shows that working out the perfect amount that can meet the necessities is crucial. Otherwise, you might end up getting the wrong loan option and an incorrect amount that might remain unused. read more blogs by clicking the url.