Nowadays, taking a loan has become a common thing these days. It is necessary to pay regular installments every month, otherwise there is a penalty and loss of credit score. But often people get worried due to high Monthly EMI. Every month there is a feeling of tight budget and mental pressure. Sometimes the expenses increase and the income does not increase that much.
Foreclosure means closing the loan in one go is not possible for everyone. In this, a huge amount has to be paid which not everyone can afford. Given below are eighty easy and practical ways that can reduce your EMI without foreclosure. By following them, you can balance your monthly budget and handle loan pressure easily.
Loan tenure is longer
More months means less monthly burden. The bank offers you flexible tenure which is according to your financial condition. You can easily adjust your repayment plan by requesting the bank. There is also a drawback of a long tenure – the total interest amount becomes high.
But if your monthly cash flow is tight, or you have limited income, then this option can be quite beneficial. It is easy to pay low Monthly EMI and your monthly budget is also not disturbed. The biggest advantage of this option is that you feel relaxed every month and can avoid financial stress.
Reduce the interest rate
Often people take loans but do not pay attention to the interest rate.
The bank can reduce the rate by looking at your payment history and credit score. Therefore, it is important to remain active. You can also choose a bank with low interest rate by comparing. New offers and schemes keep coming in the financial market all the time. Monthly EMI automatically gets reduced when the interest rate is low.
Balance Transfer
Balance transfer is another good option to reduce EMI. In this you transfer your loan from one bank to another. The process of balance transfer is easy. But you should first estimate the charges and processing fees of the new bank. If the overall cost is less than do the balance transfer.
Often people ignore this option. But this method can prove to be effective.
- Understand the prepayment disadvantage of old bank
- Calculate the overall savings properly
Take advantage of part payment
Part payment means paying some part of the loan at once. This directly affects your Monthly EMI. When the principal reduces, the EMI also reduces. Part payment can be made each month or year. Some banks do not levy any penalty for this. If you get bonus or savings then make part payment.
Income Ratio Update Karen
The bank calculates your EMI based on your income. If your income has increased but you have not informed the bank, then you are missing the option of lower Monthly EMI. You should show your updated income proof to the bank. You can update your income ratio with salary slip, bank statement and tax return. When the bank sees that your repayment capacity is good then it can restructure the EMI.
Submit your updated income: In this, include your new salary slip, fresh bank statement and tax return if any.
Income documents: The bank does not accept old or unclear documents.
EMI review: After the bank receives the formal request, it considers your case.
Use flexible EMI plans
Nowadays many banks offer flexible EMI plans. In some plans Monthly EMI is low initially and higher later. In some it is fixed. If you are currently on low income and are going to increase your income in future, then flexible EMI plan is the best. Discuss this option in detail with your bank. Every bank has its own plan, so do a comparison. . That is why people want the EMI to be less but the loan should continue. Do you also want your monthly EMI to be reduced but you do not have to close the loan early? So today we will know how you can reduce your EMI by smart planning and using simple options of the bank
Add Co-Borrower
If you take a loan jointly with someone, your repayment capacity doubles. This is called co-borrowing. The bank also considers the income of the co-borrower when evaluating your application. When combined income increases, the bank may offer you a better Monthly EMI plan. Having a co-borrower gives the bank more confidence in your ability to repay. This option is especially useful for those with a low single income.
Changing Loan Type
Sometimes the type of loan you take turns out to be more costly. Just like the interest rate of unsecured loan is higher. Taking a loan against house or property reduces the Monthly EMI considerably. The interest rate of secured loan is low and the tenure is also flexible. You can get information about the options to change the loan type from the bank.
The process of every bank is different, so it is important to compare. If you have a fixed asset, you can use it to get better loan terms. This change can reduce your overall loan stress. Banks have more favorable conditions for secured loans. This option is best for those people who want to reduce their Monthly EMI burden without closing the loan. Converting the loan type is a smart strategy if done at the right time.
Conclusion
It is easy to take a loan but it is difficult to manage the Monthly EMI. Every person wants to reduce his monthly burden. Foreclosure is not feasible for everyone. But the steps given above can prove to be helpful for you. If you follow these tips, you can reduce EMI without closing the loan. Planning and consultation with the bank is necessary at every point. It is very important to take smart decisions after understanding your financial condition. Not every option is suitable for every borrower, hence comparison and research are necessary. Reducing EMI is not just a way of saving money but also a way to reduce stress. Keep your goals clear and manage repayment with discipline.