How to Reduce Emi of Existing Personal Loan? (2024)

FAQs

How to Reduce Emi of Existing Personal Loan? ›

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.

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.

By extending your repayment period, you could lower your monthly instalments, giving you some breathing space to meet your financial obligations. This option is available on home loans, vehicle finance and personal loans.

Refinancing a personal loan can be a good strategy to save money on interest or pay off your loan sooner. There are several situations where it may make sense to refinance your loan. If interest rates have fallen or you've improved your credit score, you may be able to refinance to get a lower interest rate.

Full form of EMI is equated monthly instalments, which includes both the principal amount and the interest on it. Therefore, lowering your loan EMIs can help you reduce your total financial burden and allow you to put the money saved to better use.

First, you can contact your loan provider and ask whether you can bring down the payments. Lenders may be able to provide support, such as a payment holiday or a period of reduced payments or reduced interest, or a repayment plan.

Conclusion. Paying more than your EMI in a personal loan is a viable option that can lead to significant benefits. Whether it's through an additional EMI or lump sum payment, reducing the outstanding principal balance helps you save on interest charges and shorten the loan tenure.

You may be able to lower the rate of your current loans or your credit cards, especially if your credit score has improved or if overall interest rates have gone down since you initially applied for the loan. Make sure to consider any fees that might be associated with refinancing.

Pros of Paying Off a Personal Loan Early

With loan payments out of the way, you free up money to pad your monthly budget. You may have more funds to direct to another financial goal, such as investing, saving for a down payment or just having more "fun money," Nitzsche says.

You can apply for restructuring only once. 7. What are the restructuring options that are available to me? The balance tenure of the loan can be extended by a further period of maximum 24 months, including the moratorium period at the bank's discretion to ease your monthly EMI repayment burden.

How can I lower my personal loan payments? ›

Refinance if Possible

This means you can look into refinancing your personal loan to lower your interest rate and monthly payments. In some cases, you can secure a new, longer term, which can also lower your monthly payments, thereby making them more manageable for your budget.

Common debt negotiation strategies include asking for reduced interest rates, working with a lender to create a repayment plan and considering debt consolidation. Talking directly and honestly with your lender may be a helpful route to debt relief.

Over the loan tenure, you may be able to save money by negotiating a lower interest rate on a personal loan. It's imperative to assess the most affordable rates available and attempt to convince the lender to provide a reduced annual percentage rate (APR).

I am writing to request a reduction in the EMI amount for my [loan type] with [bank name]. Due to certain financial constraints, I am finding it difficult to pay the current EMI amount on time. I have been a loyal customer of [bank name] for [duration] and have always maintained a good repayment record.

By extending your repayment period, you could lower your monthly instalments and enjoy some breathing room to meet your financial obligations. Restructures are available on home loans and vehicle finance.

Borrowers with low income or a history of missed payments tend to get the highest interest rates because there is no certainty that they will be able to make full payments. The length of the loan: Lenders make more money from long-term loans than short-term ones because the debt has more time to accrue interest.

The reducing interest rate is calculated on the diminishing principal amount. Every month when you pay your EMI, your principal loan amount decreases. And, when you opt for the reduced interest rate, the interest will be calculated only on the reduced principal amount at the time of EMI payment.

If you have a sudden extra inflow of cash, through a raise in your salary or a bonus, you can pay back a considerable part of the loan to the lender in one go. This would directly affect the principal amount to be paid, reducing the tenor and thereby the EMI.

Prepayments are helpful for reducing Home Loan tenure and EMI. Whenever you have surplus funds such as bonuses or tax refunds, consider using them to make prepayments towards your Home Loan. These prepayments directly reduce the outstanding principal amount, leading to interest savings and a shorter loan tenure.

You may be able to shrink monthly debt payments by refinancing your car or home, recasting your mortgage, consolidating your debt, using a balance-transfer card or appealing to the creditors.