EMI in Advance - How Bajaj Finserv Advance EMI Payments Works

Understand how Bajaj Finserv Advance EMI Payment works and explore its key benefits for managing your loan repayments smartly.
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EMI in Advance - How Bajaj Finserv Advance EMI Payments Works
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2 min read
24 July 2023

Convenient access to credit holds significant empowerment. The capacity to secure funds swiftly for immediate needs, followed by gradual repayment in manageable instalments, lies at the core of fostering financial inclusivity. Equated Monthly Instalments (EMIs) have garnered favour, offering the ability to disperse loan repayment over an extended duration, accommodating substantial financial obligations within a modest monthly budget. While standard EMI payments deliver convenience, there is an alternative that brings added benefits: upfront EMI payments. This approach presents an even more advantageous avenue for borrowers.

What is a regular EMI payment?

A regular EMI payment is the standard method of repayment, where you pay equal instalments every month over a specified tenure, consisting of both the principal amount and interest. This mode of payment is widely used for various types of loans and EMI purchases, making it a common choice for those seeking to manage their expenses more efficiently.

Planning to make purchases that require financing? The Bajaj Finserv Insta EMI Card allows you to convert your purchases into easy EMIs with flexible repayment options. Check your offer today. You may already be eligible, find out by entering your mobile number and OTP.

What is an advance EMI payment?

An advance EMI payment, as the name suggests, involves making EMI payments in advance. In this payment mode, you pay a lump sum amount, equivalent to a few EMIs, together. This bulk payment is made in advance, before the completion of the repayment tenure. This lets you enjoy the benefit of reduced EMIs over the loan tenure or a reduction in the loan tenure itself.

Use the Bajaj Finserv EMI Network Calculator to understand your EMIs

The Bajaj Finserv EMI Network Calculator is a smart tool designed to help you plan your purchases and repayments better. Whether one is shopping online or offline, this calculator helps borrowers estimate their Equated Monthly Instalments (EMIs) based on the product price, tenure, and applicable interest rate—without the need for a credit card.

By simply entering a few details like purchase amount and preferred repayment duration, you can instantly see your EMI breakup. This helps you make confident shopping decisions, ensuring the EMI fits your budget. You can also try different combinations to choose the most convenient repayment plan.

Using the Bajaj Finserv EMI Network Calculator not only brings clarity but also helps you understand your financial commitments beforehand—making shopping on EMIs smooth and hassle-free.

Ready to experience hassle-free EMI shopping? The Bajaj Finserv Insta EMI Card offers pre-qualified card loan offer amount up to Rs. 3 lakh for all your purchase needs. Check your eligibility instantly. You may already be eligible, find out by entering your mobile number and OTP.

Insta EMI Card
Insta EMI Card

How does paying EMIs in advance work?

Paying EMIs in advance, also known as advance EMI payment, involves making one or more EMI payments upfront when you take out a loan. Here’s a detailed breakdown of how advance EMI payments work and what borrowers need to know:

  • Initial upfront payment
    When opting for an advance EMI loan, the borrower pays a specified number of EMIs upfront. This is typically agreed upon at the time of the loan agreement. For instance, if two EMIs are paid in advance, the borrower starts repaying from the third month onward.
  • Reduced interest burden
    Since the advance EMI covers a portion of the principal, the overall loan amount on which interest is calculated reduces slightly from the beginning. This often results in lower interest payments over time compared to loans with standard EMI structures.
  • Principal repayment in advance
    In most cases, the advance EMI payment is applied directly to the loan principal, thus reducing the outstanding balance right from the start. This can be particularly advantageous in loans with high-interest rates, as it helps in reducing the cumulative interest payable.
  • Impact on loan tenure
    Paying EMIs in advance can either shorten the loan tenure or reduce the overall EMI amount, depending on the terms agreed with the lender. Generally, borrowers who pay advance EMIs continue with their scheduled EMI amount, but the term of the loan may be reduced.
  • Interest calculation
    The interest for an advance EMI loan is calculated based on the adjusted loan amount after subtracting the advance EMI payment. Since a portion of the loan is already settled upfront, this reduced loan amount means lower interest costs over time.
  • Improved eligibility and approval chances
    Some lenders may consider advance EMI payments as a sign of financial stability, potentially enhancing a borrower’s eligibility for the loan. Paying EMIs in advance also demonstrates commitment, which may increase the chances of loan approval or even lead to better interest rates.
  • No EMI due for initial period
    In advance EMI plans, borrowers do not have to make monthly payments during the initial agreed period, as the advance payment covers this duration. This can be beneficial for borrowers who anticipate a temporary shortfall in income or other financial obligations during this time.
  • Tax benefits
    For certain types of loans, like home loans, paying EMIs in advance can allow borrowers to claim tax benefits on both principal and interest repayment under Sections 80C and 24(b) of the Income Tax Act, provided the loan is for property purchase.

By understanding these facets, borrowers can make informed choices about whether advance EMI payment suits their financial goals and budget, helping them to potentially reduce costs and manage cash flow effectively.

Looking for a financial solution that recognises your creditworthiness? The Bajaj Finserv Insta EMI Card provides instant approval and flexible EMI options based on your financial profile. Check your Insta EMI Card offer now. You may already be eligible, find out by entering your mobile number and OTP.

Things to check before paying EMIs in advance

  • Check the lender’s advance EMI policy
    Each lender has specific terms and conditions regarding advance EMI payments. Ensure you understand these terms, including any minimum or maximum limit on advance payments, as well as any restrictions on the number of EMIs that can be paid in advance.
  • Understand the impact on interest savings
    Paying EMIs in advance may reduce the loan’s overall interest cost. Calculate how much you might save on interest payments with the advance EMI option, as the benefits vary based on loan type, interest rate, and remaining tenure.
  • Verify if there are prepayment charges
    Some lenders charge prepayment fees if you pay off EMIs or make a substantial payment upfront. Before proceeding, confirm if any charges apply, as these can offset the benefits of reduced interest costs.
  • Confirm effect on loan tenure
    Paying EMIs in advance can impact the loan tenure. Discuss with the lender to confirm if the advance payments will shorten the loan tenure or reduce the monthly EMI amount, as this choice can affect your overall financial planning.
  • Review your cash flow and liquidity
    Consider whether paying EMIs in advance will impact your cash flow and liquidity. Ensure you have enough funds for other expenses and emergencies before committing a significant amount upfront, as this may otherwise lead to financial strain.
  • Understand tax implications
    For home loans, both principal and interest payments offer tax benefits. Verify how advance EMI payments affect your tax deductions under Sections 80C and 24(b), as paying too much upfront may alter the tax-saving potential for the current financial year.
  • Check your future financial goals
    Evaluate if paying EMIs in advance aligns with your long-term financial objectives. Consider if the money set aside for advance payments could be better used elsewhere, such as in investments or savings that may offer higher returns than the interest saved.
  • Know the repayment flexibility
    Confirm with the lender whether you’ll retain flexibility for future payments. Some lenders restrict additional prepayments once advance EMIs are made, which could limit options if you want to make further payments to reduce interest later on.

By reviewing these points, you can make a well-informed decision about advance EMI payments, ensuring it aligns with both immediate needs and future goals.

Difference between advance EMIs and arrear EMIs

Feature

Advance EMI

Arrear EMI

Payment timing

Paid at the beginning of the month

Paid at the end of the month

Interest calculation

Calculated on the outstanding loan amount at the beginning of the month

Calculated on the remaining principal amount at the end of the month

Initial payment

Higher initial payment

Lower initial payment

Interest savings

Lower interest over the loan tenure

Slightly higher interest over the loan tenure

Suitability

Suitable for borrowers with surplus funds at the beginning of the loan

Suitable for borrowers with regular income and monthly cash flow

Total interest paid

Generally lower

Generally higher

Example

Suppose the loan disbursal is on January 1, 2023. The first EMI is paid on January 1, 2023.

Suppose the loan disbursal is on January 1, 2023. The first EMI is paid on February 1, 2023.


Benefits of making an advance EMI payment

  1. Improved loan eligibility: Choosing advance EMI payment can enhance your loan eligibility. Since the EMI burden is reduced, lenders may be more willing to approve a higher loan amount based on your repayment capacity.
  2. Lower monthly instalments: The primary advantage of paying EMIs in advance is that it leads to lower EMI amount throughout the loan tenure. This reduction in monthly instalments helps you manage your finances more effectively, especially during periods of financial strain.
  3. Better cash flow management: Advance EMI payment eases your cash flow burden as you pay a significant amount upfront. This helps in better cash flow management during the loan tenure, providing greater financial stability.
  4. Reduction in loan tenure: With lower EMIs to pay, you now have the option to reduce the loan tenure if desired. This means that the loan can be repaid faster, saving on interest costs and achieving financial freedom sooner.

Insta EMI Card features & benefits

How to avail of EMI payment in advance?

Making an advance EMI payment with the Bajaj Finserv Insta EMI Card is a straightforward process. You can pay your EMIs in advance through our customer portal by following these simple steps:

  1. Go to our customer portal by clicking on ‘SIGN-IN' button on this page
  2. Enter your mobile number, date of birth and verify your details with an OTP
  3. Click on the loan account for which you want to make an advance payment
  4. Choose the 'ADVANCE EMI' option from the list
  5. Enter the required details and proceed to pay

Conclusion

In conclusion, paying your instalments in advance offers several benefits. It helps you build good money habits and save money in the long run. By opting for early Equated Monthly Instalments (EMIs), you can reduce the amount you pay in interest and may even qualify for discounts from financial institutions. Paying EMIs ahead of schedule also boosts your creditworthiness, opening more financial opportunities for you. Plus, it brings peace of mind, knowing you have taken care of your financial commitments early. As technology makes financial transactions easier, choosing to pay your EMIs in advance is a smart and practical move. It gives you the confidence and efficiency to manage your finances effectively.

Want better control over your monthly expenses? The Bajaj Finserv Insta EMI Card lets you choose repayment tenures from 3 to 60 months to suit your budget perfectly. Check your eligibility today. You may already be eligible, find out by entering your mobile number and OTP.

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Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.

Frequently asked questions

Can we pay the EMI amount in advance?

Yes, with the Bajaj Finserv Insta EMI Card, you have the option of paying the EMI amount in advance to enjoy reduced monthly instalments and do away with the stress of making timely EMI payments.

How can I close my EMI in advance?

To close your EMI in advance with the Bajaj Finserv Insta EMI Card, you can visit our customer portal – My account. There, you have sign-in using your registered mobile number, go to ‘My Relation’ and choose the option to pay your EMIs in advance.

Can I opt for EMI in advance if the interest rate is floating or fixed?

Whether the interest rate is floating or fixed, you can opt for EMI in advance with the Bajaj Finserv Insta EMI Card and enjoy the advantages of lower interest costs and improved loan eligibility.

Does the interest get deducted from the beginning itself when it is an advance EMI?

Since the Insta EMI Card is a No Cost EMI Card, there is no interest that is added to your EMIs.

Is advance EMI good?

Advance EMI can be beneficial for those seeking financial predictability and efficient budgeting. It allows individuals to plan ahead and avoid the burden of monthly payments, offering greater convenience and peace of mind.

How does advance EMI work?

Typically, advance EMI involves paying a portion of the loan amount or purchase price upfront, before the loan or credit is disbursed. Subsequently, regular EMIs commence. This payment structure helps you secure financing promptly and enables lenders to reduce the risk of defaults.

What are the benefits of an advance EMI payment?

Advance EMI payments offer several advantages. They facilitate better financial planning and help avoid cash flow disruptions, as the initial payment reduces the EMI burden in the following months.

Looking to optimise your EMI payments with advance options? The Bajaj Finserv Insta EMI Card provides flexible repayment solutions with nil foreclosure charges. Check your eligibility now. You may already be eligible, find out by entering your mobile number and OTP.

What happens if I pay advance EMI?

Paying advance EMIs can bring several benefits. You may qualify for discounts, reduce overall interest payments, and enhance your creditworthiness. It fosters disciplined financial habits and provides peace of mind, knowing you have settled future payments ahead of schedule.

What is the meaning of EMI in advance?

EMI in advance refers to making a loan or instalment payment before the scheduled due date. Choosing this option can lead to financial advantages, such as potential discounts and decreased interest payments. It signifies a proactive approach to managing finances, promoting responsible money habits and overall savings.

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