A Personal Loan offers a convenient avenue to address financial requirements without putting your assets at risk. Whether it is handling emergencies or realising your aspirations, a Personal Loan caters to diverse needs. However, it is essential to recognise that the EMIs associated with a Personal Loan can become an added monthly expense. Without careful financial planning, they may strain your budget and feel burdensome. Read this blog to know effective strategies on how to reduce your Personal Loan EMIs, alleviating financial pressure.
Top 7 Useful Tips to Reduce Your Personal Loan EMI Burden

You can significantly reduce your EMI burden by implementing these 7 smart strategies:
1. Borrow Only as Per Your Requirement
Personal Loan apps provide instant Personal
Loan with minimal documentation. These facilities may tempt you to
avail of a Personal Loan even if you do not have an immediate
requirement for finances. However, this cannot be termed a good idea,
as it will unnecessarily burden your monthly budget. You should opt
for a Personal Loan only when you need urgent finances.
You
should choose the loan amount as per your requirements. You should
neither choose less nor more than what is required. This way, you can
save yourself from paying unnecessary high EMIs.
2. Choose an Appropriate Loan Tenure
Your loan tenure is one of the significant factors that impact
your Personal Loan EMIs. Personal Loan tenures usually range between
12 and 60 months. If your lender agrees, you can also get a Personal
Loan with a higher tenure. It is crucial to choose an appropriate loan
tenure so that your EMIs remain affordable.
By opting for a
longer tenure, you can spread your repayment over a more extended
period, significantly decreasing your Personal Loan EMIs. However,
choosing a longer term may lead to a higher interest amount than what
you would have paid for a shorter tenure. Hence, it is necessary to
strike the right balance between your Personal
Loan tenure and EMIs. Just make sure that your EMIs are neither
too less nor too high so that you can pay them every month without any hassles.
3. Opt for The Fixed Rate of Interest
There are two types of interest rates levied by lenders on a
Personal Loan – fixed interest rate and floating interest rate. In the
case of a fixed interest rate, the Personal Loan
interest rate remains the same throughout its tenure.
On
the other hand, for the floating interest rate, your Personal Loan
interest rate can change during its tenure as per the changing Reserve
Bank of India (RBI) guidelines. If the interest rate goes up, your
loan EMIs would also go up. That is why it is better to opt for a
Personal Loan with a fixed interest rate. This will allow you to plan
your EMI repayments better.
4. Make Part Prepayments Whenever Possible
Making part prepayments of your Personal Loan will reduce the
principal amount and thereby reduce your EMIs. So, try to make
part-prepayments of your Personal Loan whenever possible. You can
leverage the bonus from your employer, interest from your investments,
etc, to make part prepayments of your Personal Loan
However, your
lender may charge you a nominal fee whenever you make part-prepayment
of your Personal Loan. Usually, this fee ranges between 1 to 3% of the
outstanding loan balance. It is prudent to confirm the prepayment
charges with your lender before applying for a Personal Loan.
5. Read the Fine Print Carefully Before Applying
for the Loan
Several lenders levy some hidden
charges on a Personal Loan, which include processing fees, late
EMI penalties, cheque bounce charges, etc. These charges may
increase your Personal Loan EMIs. Thus, it is essential to read
the fine print before applying for a Personal Loan. This will help
you understand all hidden charges levied on your loan and make an
informed decision. You can also ensure that you do not miss any
EMIs of your Personal Loan so that you do not have to incur these
hidden charges.
ALSO READ :- Check Your CIBIL Online For Free To Apply For A Personal Loan
6. Choose Your Lender Carefully
The
interest rate levied by the lender is a major factor that decides
your Personal Loan EMIs. You must try to get a Personal Loan at the
lowest interest rate. For this, you need to compare Personal Loan
interest rates offered by various lenders and opt for the one that
suits you the best.
You can also negotiate with your lender to
reduce your Personal Loan interest rate if you have a good
credit score. However, the lowest interest rates should not be
your only criterion when figuring out how to reduce the EMI of an
existing Personal Loan. You should look at other factors, such as loan
tenure, repayment flexibility, customer support, etc.
7. Debt Consolidation
If you have
multiple high-interest loans, consider consolidating them into a
single Personal Loan with a lower interest rate. By consolidating
your debts, you can streamline your repayment process, alleviating
the stress of juggling multiple payments and due dates every month.
It will not only simplify your financial obligations but also reduce
the risk of missed payments.
Opting for a Personal Loan for debt
consolidation often results in a lower overall monthly payment,
making it easier to budget and manage your finances effectively. With
a reduced interest rate, you can save a significant amount of money
over the tenure of the loan, allowing you to allocate those savings
towards other financial goals or emergencies.
To Conclude
Managing your Personal Loan EMI does not have to be a burden. By implementing these smart strategies to reduce your Personal Loan EMI, you can gain control of your finances and find yourself on a path to financial freedom. Poonawalla Fincorp offers affordable Personal Loans with minimal documents and competitive interest rates. Apply Now!
Frequently Asked Questions About How to Reduce EMI
1. What factors influence the EMI of a
loan?
Several factors play a role in determining your
loan EMI. The primary considerations include the interest rate and
the duration of the loan. Additionally, factors such as the loan
amount and the down payment made also impact the EMI amount.
2. Is it worth paying off a personal loan
early?
Yes, by paying a Personal Loan early, you can
save the interest and free up your money for a monthly budget.
3. What is the impact of the down payment amount on
lowering my loan EMI?
The impact of your down
payment on reducing your loan EMI varies depending on your lender's
terms and the type of loan. Typically, a larger down payment
decreases the total loan amount, which translates to lower EMIs
throughout the repayment period.