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How to Reduce Your Personal Loan EMI - 9 Smart Ways to Manage EMIs

posted on 2020-05-23 08:34:15 by Admin

How to Reduce Your Personal Loan EMI - 9 Smart Ways to Manage EMIs

Nowadays, it is easier to get personal loans. With the 4 minutes approval and 24 hours disbursal time, personal loans are best to meet the financial needs. After the hours of planning for your loan, it is time to pay your EMIs. From the start,you must lay the groundwork of paying the monthly EMIs.

This way you will eventually lower your personal loan EMI. Not only after getting the loan but also during the loan process, you must keep in mind the EMIs and if you have resources to pay it. With these some simple smart ways, you can drastically reduce your EMI burden.

Read on!

9 Smart Ways to Manage Your Personal Loan EMIs

As a responsible borrower, you must read the loan agreement carefully to avoid any hidden costs. The secret for managing EMIs lies in your selection of loan schemes. So, never agree to the loan unless you know all the EMI breakup and other charges.

#1. Optimizing Loan Amount

Before you apply for the loan, analyze how much you can chew. Compare it with your current source of income. If you can spare the funds for EMI after deducting monthly expenditure then only apply for the loan.

Also, check what are your actual needs. Apply for as minimal amount as possible. Look for other sources of funds like savings, FD, etc. Higher the loan, the higher the EMI you will have to pay. Which is a financial burden for the months to come.

So, do not get enticed with the offer of a high loan amount even if you have ahigh credit card score.

Choose the loan amount as much your pocket allows you to do so.

#2. Choose the Best Loan Plan

Along with the right loan amount, you must take a loan from the right financial institution. Some multiple banks and NBFCs offer personal loans at low-interest rates. So, look for multiple options and compare their interest rate repayment duration, eligibility criteria, processing charges, etc.

List down the institutions that best suit your needs, talk to them, and get clear details of the loan policies. Nowadays you can compare them online easily without much effort.

Choose the best plans which suit your financial goals.

#3. Check Repayment Duration

In addition to the interest rate, you must check the loan tenure as well. The repayment period is the time within which you have to repay the loan. So, you have to choose a plan with optimum repayment time.Long term tenure is lucrative but you will end up paying more interest.

So, as per your EMI repayment capacity, choose the shorter tenure as possible. It will save you from paying extra money on the loan.

Check Out: COVID-19 Personal Loans by Public Sector Banks

#4. Reading Loan Agreement Carefully

Before the final signing for the loan, read the agreement carefully. In between the long paragraphs, there may be hidden costs. Like late EMI penalty charges, processing charges, foreclosure charges, etc. So, ask your agent to clearly explain all the details to you.

Check out all the loan policies and the associated charges. Raise necessary questions to the lender where possible. Only after getting all the details, sign the final agreement.

#5. Calculating EMI Priorly

Equated Monthly Installments consists of loan amount and the interest rate. It is computed as per the loan amount, interest rate, and the time. With the online EMI calculator, you will get the idea of the monthly payments.

Using an online EMI calculator is easy, you just need to enter the principal, rate, and time. It will return the total interest and the monthly EMIs. It will help you to finance your loan smartly.

Check if you can pay the EMI with your monthly source of income. Try with 2-3 plans and choose the one which best suits your needs.

Read: 9 Ways to Manage Your Funds During COVID-19

#6. Revising Loan EMIs

If you have a long term personal loan then you reduce the EMI burden by revising it. This process is ideal for a yearly basis. So if you have got an increase in salary, then you can ask your bank to revise your EMI.

So if your income has increased by 20% then you can increase EMI by 10%. This way, you can repay the loan in shorter durations. Hence, low interest on the loan and no financial obligation to the lender.

#7. Prepay Loan Amount

Relief from debt is the best gift you can give to yourself. So, if you have any avenue to prepay your loan, then do it ASAP to reduce the EMI Burden.You may have to pay foreclosure charges for that but it will still cost you less than the monthly EMIs.

Each bank applies different rates on the outstanding loan amount to close the loan account.

#8. Loan Consolidation

Loan consolidation means paying off your all outstanding loans by applying for the new loan. So, if you're fed-up with EMIs of multiple loans, then apply for the fresh personal loan.

This way you will have only one loan to take care of. Also, it helps to manage EMIs as well. With multiple loans, you might miss out on EMI which will decrease your credit card score. So, debt consolidation is one of the ways you can look for reducing the EMI Burden. You can also opt for Loan Transferto enjoy the benefits of low interest rates.

#9. Insurance for High Ticket Loan

As a plan for Personal Loan EMI repayment, you can opt for the insurance of your loan. This is beneficial in the situation when due to some unforeseen circumstances you would not be able to pay the EMI. So, having insurance can help to reduce your loan burden.

For example, in case of accidents, job loss, etc you will be safe from any stringent actions from the bank. With the high ticket loan, it is a useful option to protect yourself.

Conclusion

The strategy to reduce personal loan EMI lies in the proper planning of the loan. It includes choosing the right loan amount, interest rate, and payment tenure. Pick the best plan which suits your pocket. Don’t take loans more than necessary.

Also, keep track of loan EMI to avoid any penalty. Revise your EMI as per the change in income. Last, you can prepay your loan to minimize the financial burden.

Read: Should I Choose Loan Moratorium?

 

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