Without the need to pledge collateral, personal loans are a great way to meet your financial needs. Both salaried and self-employed borrowers are eligible for personal loans, which are readily available from banks, NBFCs, and other financial institutions.
A personal loan can be obtained for a variety of purposes, including funding future studies, family emergencies, and more. In addition, their interest rates are higher than those of other types of loans. As a result, we all need to save money in some way, and it’s only natural to wonder how to cut down on EMIs, which are higher for personal loans.
HDFC Bank suggests the following five smart ways to reduce your personal loan EMI burden:
- Choose a step-down EMI plan
A step-down EMI plan is offered by a number of banking and non-banking institutions. In this type of plan, a borrower takes out a personal loan and pays back a large amount of the money borrowed with interest in the beginning. As the principal decreases monthly, the EMI decreases over time. It is a great choice for people who are getting close to retiring. - Choose to make a partial prepayment
To lessen the burden of your EMIs after you have paid off multiple EMIs, the majority of lenders offer the option to partially prepay a portion of your loan. You pay a large sum of money, which is deducted from your outstanding principal balance, as the system works. When the principal balance drops, a lower interest rate will result in lower EMIs. You can use your annual bonus or variable pay to pay some of the money you borrowed. - Take into consideration a loan with a balance transfer option.
With a balance transfer loan, the balance of the loan is transferred to a new lender. Additionally, you can get a loan with a longer repayment term and a lower interest rate, both of which can reduce your EMI. The new lender’s lower interest rate should be taken into account in addition to the costs of loan processing fees and foreclosure fees if you choose to use this option. - Take advantage of a Personal Loan Top-Up with a lower interest rate
By taking out a top-up loan, you can lower the monthly payment on your personal loan. If you have been making on-time payments on your Personal Loan EMIs, you can ask your lender for a Top-Up loan on the existing loan. By making your payments on time, you can get a lower interest rate while also getting access to more funds, a longer repayment period, and, in some cases, lower EMIs.
