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Personal Loan Hacks - Lower your EMI by Following These Simple Tips

A personal loan is a great way to fund your financial needs. Personal loans can be used for a variety of reasons and hence making it a perfect choice for applicants. They come with flexible repayment tenure which allows better management of finances. As with any other loan, a personal loan has to be paid back. So, what are the ways in which the EMI for a personal loan can be reduced? Let us discuss how this can be done.

Tips to Reduce the Personal loan EMI 

  • Opt for the right loan amount – The higher your loan amount is, the higher will be your EMI. While deciding the loan amount to be borrowed, borrow only absolutely how much you need. You might be eligible for a higher pre-approved personal loan but remember it is after all to be paid back. Assess your financial needs and borrow only how much you will really need.
  • Opt for the right loan tenure – The longer your loan tenure is, the smaller your EMI amount would be. It is important to assess your financial status and determine how long you would need to repay back your loan. Keep in mind that longer tenure also means paying more interest. Also, calculate your payment capacity keeping in mind any bonuses that you may receive during the year which will help ease the financial burden. After careful assessment of all the factors, you may choose a tenure that suits you.

  • Make your payments before due dates – Like with any other loan, your EMI payments should be made on time for a personal loan. Missing payment deadlines can result in hefty penalties. A good way to ensure this is to set up an auto-debit facility that ensures your EMI payment is done every month before the due date. It is also important that you not only pay the minimum amount due but the entire outstanding amount. You can even set a reminder from the bank to ensure you have sufficient balance in your account.
  • Assess EMI amount – Nowadays, mostly all banks offer an EMI calculator that lets you calculate exactly the amount that you need to pay as EMI. It helps to change the tenure and loan amount to see what would be your monthly outflow and total outflow at the end of the loan repayment tenure. You can adjust the tenure and loan amount and take what suits your financial needs and status. 

  • Consolidate all your debt - To satisfy your financial needs in the past, you might have needed to borrow money from several different lenders. You could lose a significant amount of money each month if you have to pay interest on a number of modest loans. Maintaining track of numerous different EMI payments can be very difficult, and you run the risk of accruing late fees. By taking out a personal loan to pay off all of your existing debt, you may avoid all of these inconveniences. You may easily manage your EMI payments and pay off your debts rapidly as a result. A smart option to reduce the overall EMI amount you have to pay each month is to consolidate your debts.

  • Make a down payment – When you make a down payment, you are reducing the total amount due to be paid by you. If you have a sudden cash inflow in the form of bonuses or from other income sources like investments, you can use that to pay a certain part of your loan. Doing this reduces the total loan amount due and hence reduces the EMI too.
  • Choose a step-down EMI plan - A step-down EMI plan reduces the borrower's EMI payments yearly throughout the duration of the loan. The first few years of the repayment period in this plan require that a sizable percentage of the principal borrowed as well as the interest component of the loan be repaid. Yet, as the loan period lengthens, the EMIs decrease. The hardship of loan payments is lessened by a step-down EMI option by drastically reducing the principal. This option is ideal for persons who are about to retire since it enables them to repay the loan while they still have active income sources.
  • Balance transfer to a new lender - Balance Borrowers can transfer their outstanding loan balance to a new lender with the use of a bank transfer. In addition to shifting the loan, the borrower may be able to obtain a cheaper interest rate and a longer loan repayment period, both of which contribute to a lower EMI. However, if one chooses to use this service, keep in mind to factor in the costs of loan processing fees and loan foreclosure charges as well and not simply focus on the new lender's reduced interest rate.

Things to Note while Lowering your EMI 

  1. Loan Tenure – If you are increasing the loan tenure to reduce the EMI, pay attention to how much more interest you will have to pay. Only increase your tenure to the extent it is necessary.

  2. Balance Transfer to a New Lender – While the offer from the new lender might seem very interesting, always check for hidden charges and fees. The hidden charges and fees can sometimes surpass the benefit of the low rate of interest.


Make sure to carefully consider how much you borrow and to make all required loan repayments. You could reduce your EMI payments and raise your credit score by doing this. Do all the calculations before applying for a personal loan to pay the lowest EMI possible. 

Learn everything there is to know about your finances, then design a plan to make loan repayments easily. Consider purchasing loan protection insurance if you decide to take out a higher-value personal loan.

 The loan protection insurance provider will reimburse the personal loan balance if you are unable to make a repayment because of an untimely death, incapacity, or loss of employment.


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