A personal loan is a prudent route to meet your financial needs without the need for pledging any collateral or security. You can obtain the loan proceeds for distinct reasons, whether for financial exigency or your financial goal like arranging a destination wedding, planning a trip abroad, etc. However, no matter how flexible and convenient it is to pay a personal loan, it is after all a debt, which you would want to lower as much as possible to reside a comfortable life without worrying much about the monthly personal loan EMI repayments. Discussed here are some important tips you can incorporate to lower your personal loan EMI.
Go for a step-down EMI approach
A step-down EMI approach is where your EMI payments lower every year during a specified loan repayment tenure. Here in this approach, you are required to repay a massive chunk of the principal and interest constituent in the initial years of the tenure. As the repayment tenure progresses, your loan EMI reduces.
So, opting for a step-down EMI approach reduces your loan repayment burden by lowering your principal amount considerably. This option is ideal for you if you are nearing your retirement as it permits you to repay your loan while you have an active source of income.
Make part prepayment
You can opt for a part prepayment option if you want to reduce your personal loan EMI burden. Many lenders allow you to partially prepay a considerable chunk of your loan after you have paid a specific number of your EMIs. To make your personal loan prepayment, you can use your variable pay or investments or annual bonus to repay a considerable portion of your loan. Making part prepayment lowers your loan EMIs along with your repayment tenure, which may make you debt-free sooner.
Go for the balance transfer option
This option permits you to easily transfer your outstanding loan proceeds to another lender. While transferring the loan, you can opt for a lower rate of interest and extend your repayment tenure. Both these options result in reduced loan EMI. However, before you opt for this facility, ensure to not just factor in the personal loan interest rates but also consider the expenses linked with the loan like processing charges, foreclosures fees, if any, etc.
To make an informed choice, you can use an online personal loan EMI calculator. By using this calculator, you can better compute the EMI and overall interest cost as per your repayment capacity and affordability. Once you have arrived at the appropriate figures, hit on the personal loan apply button for the balance transfer. Ensure to negotiate with the lender to whom you are transferring the loan to offer you the same figures as you calculated on the online personal loan EMI calculator to get a deal as per your requirement.
Ending note
A personal loan is a very helpful financial instrument designed to meet your personal monetary crunch. It offers swift access to funds without the requirement to pledge any security. Inadequate security even makes the personal loan a go-to option when exigency funds are required. However, many during cash crunch or emergencies avoid comparing among distinct lenders and end up opting for higher loan EMIs. In such a case, follow the above-mentioned tips to lower your overall loan cost and EMI.
