Personal Loans provide you with easy access to cash without the need to pledge collateral. The approval and disbursal process of a Personal Loan 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 that you would want to reduce so that you can 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.
How to Reduce the EMI of an Existing Personal Loan?
Here are four ways on how to reduce the EMI of a Personal Loan.
- 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 lowers the burden of loan repayment by reducing the principal amount significantly. This option is ideal for individuals approaching their retirement, as it allows them to repay the loan while they have existing active income sources.
- 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. The way it works is that you pay a large sum of money which gets subtracted from your outstanding principal amount. When the outstanding principal amount reduces, the interest amount also 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.
See AlsoHow to Get Out of a Debt Trap? - 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 loan foreclosure charges, and not just consider the lower interest rate offered by the new lender.
- 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.
Get Attractive Interest Rates With HDFC Bank Personal Loans
HDFC Bank offers Personal Loans at attractive interest rates. Our pocket-friendly EMIs start at as low as ₹2149 per Lakh ensuring that you and your wallet have the maximum benefit when you need the funds, and the least impact when you begin repayment. You can also enjoy other benefits such as part prepayment and low loan processing fees along with a flexible loan repayment tenure, quick disbursals and a completely paperless online loan application process.
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You can read more about Personal Loan EMI’s here!
*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circ*mstances. Personal Loan at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement..
