5 Smart Tips to Reduce EMI of Your Personal Loan

Financial wellness is within reach when you make smart choices, more so when the decisions are around borrowing money. And one of the most important factors that determine your overall loan experience is the EMI you pay every month. A key to elevating this experience is managing your EMIs well.

If you’re someone who’s finding smart ways to reduce loan EMIs, then you have come to the right place. Keep reading this blog and make it happen!

How to Reduce Personal Loan EMIs?

One way to manage your repayments better is to reduce the EMIs on all your new and existing personal loans. This will not only relieve your financial burden but also ensure you don’t miss any repayments, protecting you from any penalty charges or potential damage to your credit score.

From choosing a longer repayment tenure to considering a balance transfer, there are many options you can consider for your new and existing loans.

While you will read more in detail about this below, these are some effective ways to reduce your EMIs:

1. Select a longer repayment tenure.
2. Borrow the right loan amount.
3. Calculate your EMI before taking a loan.
4. Negotiate with your lender.

However, before you implement these strategies, carefully examine your financial condition and goals. This will help you make an informed decision and avoid any kind of friction in the future.

5 Tips to Reduce EMIs on Personal Loans

There are 3 factors that can affect the EMI you pay on your personal loans:

  • The borrowed loan amount
  • Additional charges like interest rate
  • Processing fees and the repayment tenure you choose.

This means that if any of these factors change, your personal loan EMI also changes.

Want strategic ways to reduce your personal loan monthly payment? Just follow these 5 simple steps and repay your loans in small and manageable EMIs.

1) Choose a Longer Repayment Tenure:

When you take a personal loan from a lender, you get to select your repayment plan before you even receive the amount. The repayment tenure you choose plays an integral part in determining the EMI you pay every month. If you want a reduced loan EMI, make sure you select the longest repayment tenure. This way your total outstanding amount will be divided into small EMIs over a longer period of time.

Also Read: What is Personal Loan Repayment and Types of Loan Repayment Methods?

2) Get the Lowest Interest Rate on the Personal Loan:

When you take a personal loan, you have to pay it back with an interest rate. Other than that, there are also some other charges like processing fees associated with the money you borrow. Finding lenders with low interest rates, nominal processing fees and no additional charges can significantly lower your personal loan EMI. Make sure you do thorough research of the borrowing terms of the lender before the application process and compare loan offers across various lenders.

3) Calculate Your EMIs Before You Even Apply for a Loan:

Calculating your EMIs before the loan application can help you gain clarity about how your repayment looks like. You can create an effective budget and be prepared for the upcoming expenses. Doing this can also help you compare offers across various lenders and get the best borrowing terms. And using Zype’s user-friendly EMI calculator to do this can make this process even faster! Just enter the loan amount, interest rate and repayment tenure and get a concise breakdown of your EMIs.

4) Take a Personal Loan for Debt Consolidation:

If you’re currently feeling overwhelmed with the EMI amount you pay and want to free yourself from this, you can consider a personal loan for debt consolidation. In debt consolidation, you can combine all your outstanding and ongoing loans into one single loan, usually with a lower interest rate. This way, you will have to pay only one, reduced EMI every month, till your loan tenure ends. Taking a personal loan for this can help you clear your outstanding immediately, protecting you from any further damage to your credit score.

5) Personal Loan Balance Transfer

Personal loan balance transfer is a facility that allows you to transfer your ongoing from one lender to another, usually for better loan terms. Depending on your lender, you can get a lower interest rate with longer repayment tenure. Choosing a longer repayment and lower interest rate reduces the EMI amount you have to pay every month.

Additional Alternatives to Consider

If you’re planning to take a new loan, doing something as simple as planning it even before you start your application process can help you reduce your EMIs. This way you can plan your expenses beforehand and choose a repayment plan that fits your budget. You can also compare offers across different lenders with low interest rates and opt for the one who is offering you the best terms and lowest EMIs. If you want to reduce EMIs on your existing loans, there are more options other than balance transfer or consolidation. You can always try to take a top-up personal loan with better terms or even negotiate your existing terms.

How CIBIL Score Helps Reduce Personal Loan EMIs?

While a high CIBIL score is a golden ticket to high value loans, it also comes with additional advantages. You get the best terms of borrowing like lower interest rates and longer repayment tenure that automatically reduces the EMI you pay. This can make your repayment a burden-free experience.

If you’re looking to reduce personal loan EMI, improving your CIBIL score is the root solution. Because this is what happens when you increase your score:

1) Lower Interest Rates:

The interest rate you’re charged is a major constituent of your personal loan monthly payment. When you get a personal loan with the lowest interest rate, your EMI automatically reduces. And a CIBIL score above 750 helps you unlock such low interest loans.

2) High Loan Eligibility:

A high loan eligibility means better terms of borrowing that fit your budget. This is achievable when you have a high CIBIL score.

3) More Negotiating Power:

Whether you’re taking a personal loan from a new lender or want to negotiate the terms on an existing loan, a high CIBIL score will give you an edge with the lender.

The Role of an EMI Calculator in Reducing Monthly EMIs for Personal Loan

Now that you know that planning your personal loan before the application process can get your favourable loan terms that fit your budget, you can opt for tools that can help you make that easier.

One of the good borrowing practices is to calculate your personal loan EMIs to create a suitable budget and compare offers across different lenders. An EMI calculator can help you calculate the personal loan monthly payments with different repayment tenure, loan amount, and interest rate based on the different loan offers of different lenders.

With Zype’s user-friendly EMI calculator you can get your EMIs instantly! Just enter the loan amount, interest rate and repayment period to see what your repayments look like. Plan your budget accordingly to get a smooth repayment experience.

Conclusion:

Paying your EMIs should be as convenient and flexible as borrowing the money. And reducing your personal loan EMIs makes that possible. It’s important to make smart borrowing choices like choosing longer repayment tenures, lower interest rates and planning your budget before you even start your application. This will ensure you don’t miss any EMI payments and don’t feel burdened by your loan.

Another way of doing this is to choose a lender who offers favourable terms for borrowing, like Zype! Get a personal loan up to ₹5,00,000 starting at just 1.5% interest per month and choose a flexible repayment period of 3, 6, 9 or 12 personal loan monthly payments.

Frequently Asked Question

How Much Down Payment Should I Pay To Reduce My Loan EMI?

The role of down payment in reducing your EMI depends on the terms of borrowing of your lender. However, a huge down payment reduces your overall outstanding amount, which makes your future EMIs smaller.

Which Kind Of Interest Rate Gives A Lower EMI - Floating Or Fixed Rate Of Interest?

Choosing between a floating or fixed EMI is an important borrowing decision. With a floating interest rate, you may initially get lower EMIs on your loans. However, this can change with market fluctuations. With a fixed interest rate, your EMIs will remain stable throughout your tenure. A high CIBIL score can help you get the lowest interest rate on your loans.

What Are The Factors That Determine The EMI Of A Loan?

The borrowed loan amount, additional borrowing charges like interest rate, processing fee, and repayment tenure are some important factors that determine the EMIs of a loan.

Can I Reduce EMI Tenure For Personal Loans?

If you have any existing personal loan, you can negotiate your EMI tenure with your lender. A high credit score, clean repayment history and strong credit profile can increase your chances of being able to negotiate the terms.

Is It Better To Reduce EMI Or Tenure?

Reducing your loan tenure will increase the EMI amount you have to pay every month. However, choosing a longer tenure will reduce your EMIs, making your repayments more manageable.

What Happens If I Pay Extra EMI For A Personal Loan?

If your lender allows you to pay extra EMI for a personal loan, then the additional amount you pay will get subtracted from your total outstanding amount, reducing your EMIs.

Is It Better To Increase EMI Or Tenure?

Increasing your loan tenure will reduce your EMI amount, helping you manage your repayments better. However, if you increase your EMI, you will get done with your loan payment more quickly.

Is Reduction Of EMI Better Than Tenure?

If you want to pay a smaller EMI amount on your loan, then it’s better to increase your loan tenure and reduce the EMI.

What Is The Formula For Reducing Personal Loan EMI?

A reducing personal loan EMI can help you reduce your EMI amount as your repayment tenure progresses.


This is the formula you can used to calculate it:

Interest Payable (Per Instalment) = Outstanding Loan Amount X

Interest rate charged for each interest.