Are you looking for some cash to finance a medical emergency, an urgent purchase, or even marriage? If so, then look towards personal loans. Used for a wide variety of purposes, these small loans are readily available from most lenders.
While several low-interest personal loans are available today, debt is always a financial burden. If you have taken a personal loanrecently or are planning to take one soon, you must be wondering how to reduce EMI of personal loan. Here are some easy tips for the same!
- Choose a longer repayment tenure
The amount of EMI you pay for any loan, including personal loans, is inversely proportional to the repayment tenure. That is, the longer your repayment tenure, the lesser will be your EMI. Most personal loan lenders will allow you to choose a flexible repayment tenure. If you feel that your EMIs per month need to be lower, choose a longer tenure. However, remember that longer tenures invite more personal loan interest rates.
- Higher down payment helps
Whenever you take a loan, you have to pay a sum called down payment to your lender. This payment does not involve any personal loan interest rates and is simply a portion of the amount you require. If you wish to reduce both your EMIs and interest payable in the long run, paying a higher amount as a down payment is a wise option. This way, you will reduce the principal amount of the loan, which will automatically reduce your EMIs and the total interest on the loan.
- Ensure timely EMI repayment
Remember that timely EMI repayment is necessary if you want to avoid penalties on your loan. With penalties, your future EMI’s will increase, and the loan will become even more unaffordable. Therefore, at the beginning of the month itself, set aside your EMI and keep it untouched. Some months of the year can be very challenging financially, and you might not be able to make ends meet. However, with effective budgeting, managing your personal loan shouldn’t be a problem.
- Prepayment helps
Whether you have applied for a personal loan online or offline, prepayment is always an option that will reduce your EMIs considerably without affecting your loan tenure or personal loan interest. So, the next time you get a bonus from work or see some surplus money in your bank account, do not hesitate to prepay your home loan. However, ensure that you double-check the foreclosure charges of your lender before making a prepayment.
The best way to keep your loan manageable is by being wise while borrowing and choosing alender who offers affordable personal loan interest rates. Use online personal loan EMI calculator that will help you find out the correct EMI as per your loan amount, tenure and interest rate. Knowing your EMI beforehand will help you plan and manage your finances better and reduce the chances of defaulting on your EMI payments.