Can we reduce the EMI of a Personal Loan? This is a common notion among borrowers looking to ease their financial burden. Fortunately, the answer is a resounding yes! Many ways are available to lighten your Personal Loan burden. Get to know simple strategies to ease your loan repayments and to have a control over your finances. By implementing these methods, you can prevent your loan from becoming a strain and focus on achieving your financial goals confidently.
Tips for EMI reduction on your Personal Loan
A few practical methods to decrease your Personal Loan EMI — ensuring your loan repayment is manageable and financially wise — are:
- Consider a step-down EMI plan
Initiate your loan repayment journey with higher EMIs and enjoy the benefit of decreasing payments over time through a step-down EMI plan. This method focuses on clearing a significant portion of the principal and interest upfront and reduces your financial burden as you move closer to retirement. This is an excellent choice for those with diminishing income sources.
- Make a part-prepayment
To lessen your Personal Loan EMI, consider making part-prepayments after a set number of EMIs. By applying extra funds, like bonuses, towards your loan's principal, you will see a drop in both the outstanding balance and interest. This decreases your EMI and shortens the loan duration.
- Opt for a Balance Transfer Loan
Lower your Personal Loan EMI by transferring your loan to a lender offering more favourable terms, such as lower interest rates or an extended repayment period. Always assess associated terms like processing fees and foreclosure charges to ensure this move truly benefits your financial scenario.
- Avail of a Personal Loan top-up with lower interest rates
If you are consistent in your EMI payments, requesting a top-up loan from your lender can be a strategic move. This not only provides additional funds but may come with a lower interest rate and potentially lower EMIs, thanks to your reliable repayment history.
- Get the right loan amount
It is crucial to determine the ideal loan amount to manage your EMIs effectively. Borrow only for essential expenses that exceed your current financial capacity. Even if your creditworthiness allows for a larger loan, it is wise to resist the temptation and only apply for what you truly need.
This ensures that your loan repayment does not become a burden. Remember, the opportunity to adjust the loan amount is available only before the disbursement stage. Prepare a comprehensive budget for your intended expenses before initiating the loan application.
- Choose the right loan tenure
The tenure of your loan inversely affects the size of your EMI payments: longer tenures lead to smaller EMIs, and vice versa. While extending the repayment period might seem like a way to make payments more manageable, you must know that this will result in paying more interest over time.
If your goal is to minimise interest costs, opting for a shorter tenure with higher EMIs might be the better choice, provided it aligns with your monthly budget. Carefully planning your finances can help in answering how to reduce the EMI of an existing Personal Loan.
- Do not miss your EMI due dates
Maintaining a good credit score is pivotal for securing favourable loan terms, and timely EMI payments play a significant role in this. Missing payments can harm your credit rating and lead to additional charges. This will impact your future loan applications.
Setting up automatic payments can prevent late payments, ensuring you never miss a due date. This proactive measure not only simplifies your financial management but also aids in building a strong credit profile. This is essential in figuring out how to pay extra EMI for Personal Loan without incurring penalties.
- Calculate your EMIs before taking the loan
The ease of securing a loan online can sometimes lead to hasty decisions regarding loan amounts. To avoid this, it is beneficial to use Personal Loan EMI calculators available on the lenders' websites.
These tools help you estimate your monthly payments and interest rates and help make informed decisions about your loan amount and tenure. This step is crucial for anyone wondering, 'can we reduce the EMI of a Personal Loan?' It allows for better financial planning and ensures that your loan does not strain your budget.
- Use a Personal Loan to consolidate your debts
If you are juggling multiple loans with varying interest rates, consolidating these into a single Personal Loan is a smart financial strategy. This consolidation can significantly lower your EMI payouts and simplify your debt management. It will be easier to track and repay your loans.
Additionally, this approach will reduce the overall interest paid and potentially improve your credit score. Debt consolidation offers a viable solution to streamline your monthly installments, thus reducing your loan burden.
Also Read: Five tips to help you plan your personal loan better
Conclusion
When it comes to Personal Loans, the goal is to keep your EMIs manageable while paying it off efficiently. Smart strategies like choosing the right loan amount and tenure, making timely payments, and considering part-prepayments will make a big difference in your financial planning.
With Axis Bank Personal Loans, you get a straightforward and user-friendly loan service. It offers loans up to ₹40 lakhs, with flexible repayment options ranging from 12 to 84 months and interest rates beginning at 10.75% per annum. The process is online, requires no paperwork, and you can get approval in just 30 seconds. This makes it a practical choice for anyone looking to manage their finances better without any hassle.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
