Managing personal loans through EMIs, are key to financial stability and saving borrowed money in the long run. Heavy EMIs can play havoc with your monthly budget, but there are useful tips to ease the burden. To make your financial life simpler, this article talks about some ways to lower the EMIs of your current personal loan.
1. Choose for a loan balance transfer
Shifting your existing loan amount to another lender with a lower interest rate is one of the effective ways to reduce your EMIs. This process, known as a balance transfer, can significantly reduce the total interest that will have to be paid over the lifetime of the loan as well as your monthly instalments.
2. Choose a flexi hybrid loan
When you convert your existing personal loan into a flexi hybrid loan, you should be able to enjoy more flexibility in your repayment period. With this, you can easily lower your cash outflow on a monthly basis by simply selecting interest-only EMIs for part of your loan term.
3. Make part payments
Part-prepaying means paying the loan more than you normally pay in EMI on the payment due date, reducing the outstanding principal immediately. Contact your lender prior to executing a part-prepayment, to determine if you have any pre-payment fees or penalties.
4. Extend your loan tenure
You can choose to enhance the tenure of your loan and thereby, extend the repayment period, which will lower your EMIs and make the monthly burden easy to manage. However, keep the long-term total cost of interest in mind as a longer tenure may lead to a higher total interest.
5. Consolidate your debts
Consolidating multiple debts with different interest rates and EMIs into one personal loan would simplify repayment and also lower your overall EMIs. Consolidating debts into one debt, at a lower interest rate simplifies your debt into one debt management and a lower monthly payment.
6. Negotiate with your lender
Sometimes talking to your lender can lead to better loan terms. During a financial crisis, you can have your EMIs lowered temporarily or have the interest rate lowered if you demonstrate good repayment behaviour. Lenders often value proactive borrowers and may provide options to help you manage the loan better.
7. Refinance your loan
Refinancing allows you to repay an existing loan with a new loan, often with better terms or a lower interest rate, which would save you interest amount and lower your EMIs overall. However, higher costs of refinancing should also be considered when deciding if refinancing is or can be effective long term.
In conclusion, if you want to reduce your existing personal loan’s EMI, it requires a considered approach based on your finances. It’s crucial to have a strong sense of your financial goals and discuss with your lender and review the terms as part of your decision-making process.
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