EMIs Applicable On Personal Loans And How To Control Repayment
Personal loans are convenient in times of emergencies, but managing its EMI payments can get a bit difficult. Here are some tips to manage your personal loan EMI payments & control repayments.
Managing routine expenses is easy, but unplanned monetary requirements sneak into your financial routine. Here, personal loans can emerge as your perfect companion. These are collateral-free loans. Therefore, you do not need to worry about pledging your precious assets, as you need to do in gold loans.While personal loans are valuable during financial turbulences, they come with a fixed repayment tenure. Financial institutions offer flexible Equated Monthly Installment (EMI) options for personal loans. You can select monthly, quarterly, or yearly EMI on personal loans. Choosing the right EMI plan or effective EMI management can help you manage your personal loan repayment.
Tips To Manage EMIs On Personal Loans And Control Repayments
• Choosing Part Or Full Prepayment Of Personal LoanPrepayment or advance payment of your loan in part or whole can help you save more. Many lenders allow you to pay a portion of your debt as prepayment after repaying a pre-decided number of EMIs (generally 12). Under the prepayment personal loan arrangement, the lender deducts the amount paid by you from the principal amount lent. However, some lenders include prepayment charges on personal loans.
By choosing a partial or full prepayment, you can shorten the loan term and lower your EMIs, thus becoming debt-free sooner.
• Choosing A Longer Tenure PeriodThe repayment period and EMI are inversely proportionate. The longer the debt tenure, the lesser the EMI and the shorter the repayment period, the higher the EMI. You can choose a more extended loan repayment period to reduce your EMIs.
However, while extending the loan term will lower your EMI, it will simultaneously result in more interest paid over the length of the loan.
• Step-Down EMIIn this arrangement, the lender asks you to pay a higher EMI during the initial repayment schedules. But, soon, the principal amount steadily reduces after each instalment, gradually reducing the EMI cost. This strategy helps lessen the interest payments burden as the loan tenure progresses.
• Paying Heed To DeadlinesManaging loans becomes a burden when you miss EMI payment deadlines. It not only spoils your credit position but also increases the burden of debt on your shoulder. Thus, try to pay your EMIs on time to the lender. Additionally, your timely payments can help you negotiate future loan amounts, interest rates, and tenure.
• Choose A Balance Transfer LoanThis loan type allows you to transfer your outstanding debt balance to a new lender. With this shift, you can access cheaper interest rates and a more extended loan repayment period from the new loan provider. Both factors help to reduce your EMI amount quickly.
• Opting For Top-up LoansThese loans are easily accessible lending facilities that can help you manage your EMI schedules. They help you fetch additional funds from your existing lender on the same loan account. You can utilise top-up loans to reduce your principal amount and, eventually, your EMIs. Prompt EMI payments allow you to negotiate a lower interest rate while you gain access to more money, a longer repayment term, and lower EMIs.
ConclusionPersonal loans are for everyone. They do not have a fixed use-case requirement and are apt for personal and professional monetary needs. Presently, the market has a plethora of platforms offering personal loans at cheap rates. One such trusted portal for easy personal loans is IIFL Finance. We provide access to swift, low-interest, and flexible personal loans. Moreover, you can use the digital services of IIFL Finance to eliminate the tedious paperwork involved in loan processing.
Q1. What are the primary factors that determine your EMI?
Ans. The primary factors involved in EMI determination are as follows.
• Loan amount
• Interest rate
• Loan Tenure
• Down payment
Q2. What can be the minimum and maximum EMI amount on a personal loan?
Ans. There is no fixed limit on EMI when taking personal loans. Different lenders offer different EMI plans to customers based on the borrowed amount. You can choose your EMI plan based on your capacity.