5 Smart Tips to Reduce EMI Of Your Existing Personal Loan
05 Apr 2022
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Personal loans offer a great way of meeting your financial requirements without compromising your assets. Personal loans can be procured for various reasons, whether for an emergency or for pursuing your goals. Leading lenders in the country are known to provide highly flexible personal loan repayment plans; thus, you get funding and plan your finances carefully as per your needs.
Now, we all want to save money. After all, a rupee saved is definitely a rupee earned. So, it is natural to wonder how to reduce EMI of existing personal loan. Reducing your loan EMIs can help decrease your overall financial burden and allow you to put the saved money to better use.
So, here are five tips on how to reduce personal loan EMI effectively.
1. Get the right loan amount
The amount of money you borrow via a loan is directly proportional to the EMI you need to pay. Hence, the most basic way to get an EMI that fits your budget is to get the right loan amount. You should only take a loan for expenses that are absolutely necessary and cannot be paid by you. Even if you have a good credit score and are eligible to procure a higher loan amount, do not apply for a loan of an amount that is higher than what you really need. Being prudent when borrowing money will make the repayment of your debt easy. Do note that changing your personal loan amount is only possible before it has been disbursed by the lender. Therefore, it is best to create a detailed account of all the expenses you need to cover with the loan amount before starting the loan application process.
2. Choose the right loan tenure
The EMI of your personal loan is inversely proportional to your personal loan tenure. The longer the period of repayment, the lower the EMI you need to pay. Now, do note that a longer tenure may see you pay more in terms of interest. If you want to save on interest paid to the lender, you will need to choose a shorter tenure with larger EMIs. However, if larger EMIs may not fit in your monthly budget, choose a longer tenure for your personal loan EMI to keep the payments affordable. Try to map your monthly expenses and plan your EMI payments accordingly before applying for the loan.
3. Do not miss your EMI due dates
Your credit score is quite crucial in determining the interest rate you get for loans. Missing out on your EMI payments will decrease your creditworthiness and increase the hassle of procuring a loan in the future. It also makes the following EMI expensive as you would need to pay the penalties associated with late payments. You can avoid these penalties by making a note of the date on which you need to pay the EMI. Alternatively, you can also select an automatic payment system with the bank. This way, you do not have to manually remember your due date each month as the money gets automatically debited. In fact, you can even have the bank send you an SMS to remind you to keep sufficient funds. All of this will help in building your credit score which can, in turn, help you get the best interest rates.
4. Calculate your EMIs before taking the loan
Getting a loan is quite simple. With just a few clicks, you can have a personal loan sanctioned without too many documents or hassles. However, this convenience can lead to impulsive decisions on your loan amount. So, it is better to do proper calculations of your loan and plan your finances, EMIs and loan tenure before starting the application process. Many lenders also provide an online personal loan Emi calculator to help you conveniently estimate the EMI amount and interest rate of your debt. These online loan calculators are free to use and can be easily found on the lender’s website.
5. Use a personal loan to consolidate your debts
In the past, you may have had to borrow from multiple lenders to meet your financial requirements. Paying interest on several smaller loans can see you lose quite a bit of your money each month. It can also be pretty challenging to keep track of many different EMI payments, and you could end up paying late fees. You can avoid all of these hassles by taking a personal loan to consolidate all of your existing loans. This makes it easy for you to manage your EMIs and quickly repay your debts. Consolidating your loans is also a great way to lower the total EMI amount that you end up paying each month.
Do choose your loan amount wisely and make sure you do not skip on making the loan repayments. This would help you save money on your EMIs and have a positive impact on your credit score. The best way to pay the lowest possible EMI is to be clever and make all the calculations before applying for a personal loan. Get a thorough understanding of your financials and create a strategy to make the loan repayments with ease. If you are opting to go for a personal loan of a higher amount, consider getting loan protection insurance as well. If you are unable to make a personal loan repayment due to untimely death, disability, or job loss, the loan protection insurance provider will pay the remaining EMIs for you. This will cover your family against any resulting financial burden and provide peace of mind.
Bank of Baroda offers affordable personal loans for your needs. Do reach out to us for further help in selecting the right loan amount and EMI tenure.
The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda 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 mentioned. Please consult your financial advisor before making any financial decision.
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