Loans

4 Ways To Reduce Personal Loan EMIs

Synopsis:

  • Choose a plan where EMIs decrease over time, reducing the repayment burden as your loan progresses.
  • Make partial prepayments to lower the outstanding principal and, consequently, your EMIs and loan tenure.
  • Transfer your loan to a new lender for a lower interest rate and extended tenure, which can reduce your EMIs.
  • Apply for a top-up on your existing loan to get a lower interest rate and extended repayment period potentially.


Personal Loans provide easy access to cash without the need to pledge collateral. A Personal Loan's approval and disbursal process is quick, and there is no end-use restriction on the loan amount. These attributes make a Personal Loan the ideal financing option when you need funds urgently.

However, at the end of the day, a Personal Loan is a debt you would want to reduce to live your life comfortably without worrying about monthly EMI payments. If you are considering taking a Personal Loan and want to know the answer to the question -, 'How can I reduce my Personal Loan EMI?', this article is for you.

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How to Reduce the EMI of an Existing Personal Loan?

Here are four ways to reduce the EMI of a Personal Loan.

  1. Consider a step-down EMI plan
    A step-down EMI plan is one in which your EMI payments decrease every year during the stipulated loan tenure. In this plan, you would typically repay a big chunk of the principal amount borrowed and the interest component of the loan in the early years of the repayment tenure. As the loan tenure progresses, your EMIs reduce if you opt for the step-down EMI plan. A step-down EMI option significantly lowers the loan repayment burden by reducing the principal amount. This option is ideal for individuals approaching retirement, as it allows them to repay the loan while they have existing active income sources.

  2. Make a part-prepayment
    How to reduce the EMI of an existing Personal Loan?  You can opt for part prepayment. Most lenders offer the option to partially prepay a significant portion of your loan after you have repaid a certain number (typically 12) EMIs. It works by paying a large sum of money which gets subtracted from your outstanding principal amount. When the outstanding principal amount reduces, interest decreases, leading to a reduced EMI. You can use funds from your annual bonus or variable pay to pay off a significant chunk of your loan. Opting for a part-prepayment reduces your EMIs along with the loan tenure and makes you debt-free sooner.

  3. Opt for a Balance Transfer Loan
     Wondering how to reduce your Personal Loan EMI with a Balance Transfer Loan? This facility allows you to transfer your outstanding loan amount to a new lender. Besides transferring the loan, you can get a lower interest rate and an extended loan repayment tenure, which collectively results in a reduced EMI. However, if you choose to avail of this facility, remember to compute the costs associated with loan processing fees and foreclosure charges, and not just consider the lower interest rate offered by the new lender.

  4. Avail of a Personal Loan
    Top-Up with lower interest rates A Top-Up Loan also allows you to reduce your Personal Loan EMI. If you have been repaying your Personal Loan EMIs on time, you can approach your lender for a Top-Up loan on the existing Personal Loan. Your timely payments enable you to negotiate a reduced interest rate while you get access to more funds and an extended repayment tenure, with lower EMIs in some cases.

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