How to reduce EMIs of your existing personal loan

Personal loans are an excellent approach to meeting various financial needs without putting your valuable assets like home or car at risk. They can be obtained for a wide variety of purposes, including medical emergencies, home renovations, higher education, wedding expenses, debt consolidation, and much more.

But in some cases, the repayment of the loan or EMIs could become a real hassle, especially if your financial situation changes after taking the loan. The full form of EMI is Equated Monthly Instalments, which includes both the principal amount (the money you borrowed) and the interest charges on it. When EMIs become too high for your monthly budget, they can create serious financial stress.

Ready to get relief from high EMIs? Check offer in 2 steps and discover how you can reduce your monthly payments while keeping your loan on track. Smart financial management starts with understanding your options.

Why this matters: Lowering your loan EMIs can help you reduce your total financial burden significantly and allow you to put the money saved to much better use – whether that's building an emergency fund, investing for the future, or simply having more breathing room in your monthly budget.

Consider a balance transfer as a smart solution if you are having serious trouble with high EMIs that are beyond your comfortable paying capacity. To do this, you will need to transfer your existing loan balance to some other bank or NBFC (Non-Banking Financial Company) which offers a significantly lower personal loan interest rate than what you're currently paying.

How balance transfer works:

• Step 1: Research and compare interest rates from different lenders
• Step 2: Apply for a balance transfer with the new lender
• Step 3: The new lender pays off your existing loan
• Step 4: You now pay EMIs to the new lender at lower rates

By switching to a lender with better rates, you may be able to lower your EMI considerably and save substantial money on interest charges over your entire loan tenure. For example, if you're paying 18% interest and switch to a lender offering 14%, your EMI could drop by thousands of rupees per month.

Smart tip: Before you decide to do a balance transfer, make sure to carefully consider prepayment fees for your existing loan, processing charges for the new loan, and other charges levied by the financial institution. Calculate the total cost to ensure it's the right choice for reducing your overall borrowing cost.

Pro tip: Balance transfers work best when you have a good credit score and stable income, as these factors help you qualify for better interest rates.

If your personal loan EMIs are becoming expensive and are putting a serious strain on your monthly finances, you should consider converting your existing loan to a Flexi Hybrid Term Loan. This innovative loan structure can provide significant relief to your monthly budget.

With a Flexi Hybrid Term Loan, you get the flexibility to make interest-only EMIs during the initial part of your loan tenure (up to 2 years), which will result in substantially lowering your personal loan EMIs for a significant portion of the repayment period.

How Flexi Hybrid Term Loans help reduce EMIs:

• Interest-only period: Pay only interest charges for the first part of your loan tenure
• Reduced monthly outflow: EMIs can be reduced by a lot during the interest-only period
• Flexible repayment: Start paying principal through part-prepayments, without any additional charge
• Better cash flow management: Use the saved money for other important expenses or investments

Why this works: This option is perfect for people who expect their income to increase in the future (like young professionals, people starting new businesses, or those who have temporary financial constraints but expect things to improve).

✅ Check your eligibility for Flexi Hybrid Term Loan using just mobile number and OTP – 100% online process. 

Important note: While this reduces your immediate EMI burden, remember that you'll pay more total interest over the life of the loan compared to a standard loan. However, the immediate cash flow relief can be invaluable during tough financial periods.

Part-prepayment is when you pay back a portion of your outstanding loan amount that is more than your regular EMI amount. The beauty of this option is that there is typically no maximum limit on how much you can part-prepay, giving you complete flexibility based on your financial capacity.

How part-prepayment reduces your EMIs:

Prepaying a portion of your loan directly reduces the outstanding principal amount, which thereby helps you reduce your monthly EMIs on a personal loan. When the principal amount decreases, the interest calculated on the remaining balance also decreases, leading to lower EMIs for the rest of your loan tenure.

Example: If you have a loan of ₹5 lakh at 15% interest with EMI of ₹11,895 for 5 years, and you prepay ₹1 lakh after one year, your EMI could reduce to approximately ₹9,500 for the remaining tenure.

When to consider part-prepayment:

• You receive a bonus, tax refund, or windfall money
• You have surplus funds that aren't earning higher returns elsewhere
• You want to reduce your monthly financial burden permanently
• You want to become debt-free faster

If you have extra cash available and you want to reduce your EMIs permanently, you can choose the part-prepayment facility and pay off your debts earlier than originally expected. Depending on your preference, this strategy can result in either lowering of your monthly EMIs or shortening your overall repayment tenure.

Smart advice: It is always advisable to check your lender's prepayment fees and charges before making part-prepayments to avoid unexpected penalties that might reduce your savings.

You can make use of the personal loan EMI calculator to understand your monthly repayments in advance. It can significantly reduce the manual calculations involved in figuring out the EMI for a personal loan. You can get an estimated EMI by simply entering the loan amount and loan tenure into the calculator. This saves the time and effort that would have been required to manually calculate the EMI. The personal loan EMI calculator also enables borrowers to adjust the loan amount and the duration of the loan to get an EMI that fits their ability to repay.

Additional Tips for Managing Your Loan Better

Beyond the main strategies above, here are some additional ways to make your personal loan more manageable:

• Increase your income: Consider side gigs or skill upgrades to boost your monthly income
• Review your budget: Cut unnecessary expenses to free up money for EMIs
• Negotiate with current lender: Ask for rate reductions based on your good payment history
• Consider loan restructuring: Some lenders offer moratorium or EMI holidays during financial hardship
   

Remember, reducing your EMIs is not just about immediate relief – it's about creating a sustainable financial situation that allows you to meet all your obligations comfortably while still having money left over for your other goals and emergencies.