A personal loan can help you meet your budget constraints without compromising on any of your assets. Personal loans EMI help in meeting the financial requirements, which may be related to emergencies or maybe about to achieve your dreams. Lenders can provide personal loans in a matter of days in a completely paperless manner. However, as a borrower, along with offering relief and comfort personal loans, you will also be living with the burden of repayment. You might wonder however you’ll reduce the personal loan EMI outflow to urge some financial relief.
Here are some easy tips by which you can reduce your personal loan EMI:
Maximize Your Repayment Period
This is one of the best ways to reduce your EMI amount. Opting for a longer repayment tenure on your loan reduces your EMI burden. this can be as a result of your loan repayment tenure is reciprocally proportional to the EMI amount of your loan. When you extend your repayment tenure, you repay your loan over a longer period and hence the EMI amount comes down. However, keep in mind that since the personal loan interest rate is calculated on a per annum basis, choosing a longer term will result in higher interest payments during the tenure of the loan.
- Opt for a higher down payment
Down payment is the amount that the customer pays in advance at the time of purchase of the concerned item. Since a part of the total cost of the item is borne by the customer, the amount the customer has to borrow as a loan will also reduce. The loan interest is calculated on the basis of the principal amount borrowed by the customer. Hence, the higher the loan amount, the more money you have to pay as interest and the higher will be your EMI amount. Hence, paying a larger amount as a down payment is a wise decision. This will not only assist you to reduce the EMI of your loan, however, will assist you to save big within the long run.
- Look for a Lower Interest Rate
The interest rate of your personal loan processing fee is one of the most important factors affecting the EMI amount. When you choose a lower interest rate, you will be reducing your EMI. It would be prudent to have a conversation with your lender and read all the fine print and finalize the best personal loan. Make sure you understand how your interest is being calculated before you accept the loan terms.
- Select the option of Balance Transfer
If you have a high-cost loan, you can choose to refinance it by taking a low-cost personal loan. This is called a balance transfer loan, which should be at a lower interest rate. You can also take a top-up loan against your higher loan amount.
- Consolidate Your Debts
You may be in a scenario in which you are forced to borrow from various sources to meet your financial needs. If you are in a situation of multiple EMIs, it can be challenging to keep track of them and repay them. Such a scenario can also lead to the default of EMI. This can have long-term effects such as a drop in your credit score. It would be wise to take a personal loan processing fee consolidating all your existing debts. This will go a long way in helping you manage your debt and most importantly, it will reduce your EMIs.
Existing home loan borrowers who predict lower personal loans EMI and better income ought to take EMI reduction whereas creating pre-payments. Those looking for greater savings in interest cost should opt for a reduction in tenure. Existing home loan borrowers have the potential to save significant interest costs by transferring their home loan to another lender at much lower interest rates, should they first exercise the HLBT option.