If you aren’t smart about your choices, you can spend the better part of your life in paying loan EMIs. If you do not work out your finances carefully, the EMIs which you pay for loans can impact your monthly budget drastically and force you to live an anxious-ridden life.

More often than not, people aren’t fully aware of the loan agreements and the amount they are eligible to borrow. This lack of information leads to bad decisions, which can leave a lasting impact on your finances.

While personal loans are available easily in the market, they usually have a higher rate of interest and higher EMIs. However, there are several ways in which you can reduce the EMI on your personal loans and here are a few of them.

Ways To Reduce The EMI On Your Personal Loan

10 Best Ways To Reduce The EMI On Your Personal Loan

  1. Decide the Loan Amount as per Your Requirement
  2. Ensure Timely Loan Repayment
  3. Adjust the Loan Tenure
  4. Take Insurance When Opting for Larger Loan Amounts
  5. Choose the Best Option Available
  6. Read the Fine Print
  7. Revise the EMI Each Year
  8. Prepay Whenever Possible
  9. Consolidate Your Loans
  10. Carefully Calculate the EMI Prior to Taking the Personal Loan



Click Here to Apply for Instant Personal Loan from the PaySense Website.

Check Loan Eligibility


  • Decide the Loan Amount as per Your Requirement

Although things have drastically changed over time and applying for a personal loan is no longer difficult, it still does not make sense if you borrow money without thinking twice.

Thus, you should always borrow an amount that you require and not a penny more. If your credit line is high, you may feel that you can borrow more than the amount you actually need as you have the luxury of doing so, but that may make the repayment of the loan tougher in the future.

EMIs depend directly on the loan amount borrowed by you, and the best way to keep them to the minimum is borrowing funds according to your requirement.

  • Ensure Timely Loan Repayment

The advantage of having fixed EMIs as the loan repayment system is that you can reduce the burden of repaying the loan amount by spreading it out for consecutive months. If you fail to pay even a single EMI, it will reflect on your credit report.

Not only will it create a burden for the upcoming month’s EMI repayment, but you will also end up paying the penalties associated with late repayment of EMI. Your financial history, along with your credit history, will also deteriorate.

This means that in the future, taking any kind of loan will become a hassle. If you repay all the EMIs on time, lenders usually offer lower interest rates on future loans, as your creditworthiness increases.

  • Adjust the Loan Tenure

Loan tenure is the total duration of repayment wherein you have to pay back the principal and the interest. When you opt for longer loan tenure, the monthly installment which you pay can be significantly minimised. While this might seem like a lucrative option, the fact is that when you opt for a longer loan tenure, you end up paying much more money as interest when compared to the shorter loan tenures.

Thus, it is highly recommended that you work out your monthly finances and fix an optimum EMI for the shortest loan tenure possible. This way, you can get done with repaying the entire loan amount faster and save money by paying lesser interest.

  • Take Insurance When Opting for Larger Loan Amounts

When you are taking a loan for a significant amount, a loan protection insurance can be of great help. This way, you or your family members would not face the brunt of the failure to pay the EMI for any particular month. Loan protection insurances are aimed at helping out the borrower in cases like major accidents, job loss, disabilities, and even death.

When the borrower fails to pay the EMI of the loan during such cases, the loan protection insurance company would be liable to pay off the remaining EMIs for the borrowed amount. Thus, if you are applying for a high loan amount, remember to buy a protection plan as well.

  • Choose the Best Option Available

In the last few years, scores of organizations offering unsecured personal loans have come up in the market. With increasing competition, many offer lower interest rates and other beneficial features to woo customers.

So, when you decide on opting for a personal loan, make sure to look around for all the available options before settling on one.

This comparison can be easily made these days, thanks to the internet. Compare all the lenders based on their interest rates, EMIs, and other charges. It is critical that you undertake a thorough and comprehensive comparison between different lenders before applying for a loan.

  • Read the Fine Print

In addition to the EMI, several financial institutions and lenders also charge hidden fees from their customers. Most of these are conveniently placed in a lengthy loan agreement which most customers fail to read.

So, you should be completely clear about all additional charges, like processing fee, late EMI penalty, or foreclosure charges, for example, if you want to avoid paying a huge unexpected sum. Each lender will have a different set of terms and conditions which would be mentioned in the loan agreement, which they ask you to sign while applying for a loan.

Before signing this loan agreement, be sure to go through it thoroughly carefully as it contains the important policies and charges related to the loan. Do this to ensure that you do not have to cough up any unexpected fee which can increase the amount you repay, thereby increasing your EMI.

  • Revise the EMI Each Year

Each lender has their own set of rules and regulations when it comes to EMI repayment of the borrowed amount. Many lenders allow the borrower to revise the EMI payout each year. Take advantage of this policy and renew the EMI payout annually according to your yearly budget.

For example, when you suddenly get a raise in your monthly income or when there is a consistent increase in income, you can make the necessary calculations and increase the EMI amount to repay the loan faster. As a thumb rule, for every 10% increase in your monthly income, increase your EMI payout by 5%.

Although, the monthly reshuffling of EMI may seem like a hassle, this can reduce your loan tenure significantly, and you can pay off the debt in a shorter period of time.

  • Prepay Whenever Possible

If you happen to get a windfall amount from some investment, relatives or your place of employment, use it to clear the loan, or a part of it; even if it means paying a nominal foreclosure charge. When you prepay some amount of the personal loan, it can save you the interest amount on the borrowed sum, which you would have otherwise incurred throughout the loan tenure.

This way, you can pay off the borrowed loan amount faster, and you can be debt-free sooner. This is particularly true if the number of EMIs left is high.

  • Consolidate Your Loans

There might be a scenario wherein you are forced to borrow from different sources in order to fulfill your capital requirement. Usually, private moneylenders charge an exorbitant interest rate. This can make it challenging to repay multiple EMIs on time and keep track of the outstanding loan amount of different lenders. This also increases the likelihood of your defaulting on at least one of your loans.

When you land in a situation like this, your credit score can be impacted, and this would hamper all your future attempts to apply for a loan. However, it would be wise to take a subsequent personal loan if you want to consolidate all your existing loans. This will not only help you manage your debt and EMIs better but also aid faster repayment and saving money on the EMIs. 

  • Carefully Calculate the EMI Prior to Taking the Personal Loan

These days, there are several easy-to-use EMI calculators available on plenty of platforms to help you calculate the EMI for your preferred loan amount and tenure. With just a few clicks, you can get a clear picture of the EMI that you will have to pay in accordance with the loan amount and tenure. When you make this calculation in advance, it will give you a clear picture of how you would need to adjust your finances and whether the EMI would affect your monthly expenditures or not. All you have to do is enter the loan amount and adjust the loan tenure or the EMI to view all the repayment plans and select the one that suits you the best.

Following these tips can help you make smarter decisions when applying for a personal loan. By making well-informed and intelligent financial decisions, you will be able to close the loan quickly and also pay lower EMIs. Remember, when you take a personal loan for an amount which is more than what is required, you would unnecessarily end up paying more EMI every month.

So, choose the loan amount carefully, select the best lender, crunch some numbers, and make sure you understand what you are signing up for. By ensuring that your EMIs are as low as possible, you can avoid your personal loans from becoming a liability and maintain a strong credit profile as well.

Shivam Abrol

Shivam is a passionate content writer with Masters in journalism. A mutiple-award-winning writer, he brings over a decade of experience as a BFSI writer. In fact, he himself is known in his circle for sound financial advice. A writer by day and a reader by night, Shivam enjoys researching and writing on various financial topics, including credit, stock market, crypto, taxes etc. When he is not spending his time penning down an informative article or opinion, he can be found playing with his kids or collecting stamps.

More Posts