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.
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.
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
- 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.
- 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.
- 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.
- 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 - My Account by following these simple steps:
- Go to our customer portal by clicking on ‘SIGN-IN' button on this page
- Enter your mobile number, date of birth and verify your details with an OTP
- Click on the loan account for which you want to make an advance payment
- Choose the 'ADVANCE EMI' option from the list
- 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.
