Looking for ways to reduce your existing personal loan EMI and interest rate? In today’s world, personal loans have become an integral part of financial planning. They are easy to fulfill your dreams or meet urgent financial requirements. However, it’s equally important to manage your personal loan well so you don’t end up paying high interest.
Here are some prudent measures that you can take to reduce your existing personal loan EMI and interest rate:
- Improve your credit score
Credit score plays a role in determining the interest rate you get on your loan. If you have a low credit score, you may be charged a higher interest rate, increasing your EMI. Therefore, if you want to reduce your EMI and interest rates, it is essential to improve your credit score. You can do this by paying your bills on time, reducing your credit utilization, and avoiding applying for multiple loans or credit cards.
- Prepay your loan
Prepaying your personal loan is the most efficient way to reduce your EMI and interest rate. Prepaying reduces the principal amount which, in turn, lowers the interest amount you need to pay. This helps you to save a considerable amount of money in the long run. You can use a personal loan EMI calculator to find out how much you can save by prepaying your loan.
- Negotiate with your lender
Most people don’t realize they can negotiate with their lender to reduce their interest rate. If you have been a loyal customer of your lender or have a good credit score, you can negotiate with them to get a lower interest rate. You can also consider transferring your loan to another lender who offers a lower interest rate.
- Increase your EMI
Increasing your EMI is another way to reduce your loan tenure and save on interest. Even a small increase in your EMI can make a difference in the long run. Using a personal loan EMI calculator can help you understand the interest amount you can save.
- Opt for a balance transfer
If you struggle to pay your existing loan EMI, you can consider opting for a balance transfer. A balance transfer is transferring your outstanding loan amount from one lender to another to avail a lower interest rate. However, before opting for a balance transfer, you need to ensure that the new lender offers a lower interest rate and that the transfer fees are not too high.
- Apply online
When applying for a personal loan, consider applying online. Online lenders may offer lower interest rates and faster loan processing times than traditional banks. Be sure to compare offers from different lenders and read customer reviews before choosing one.
To wrap up
Managing your personal loan well is crucial to save money on interest and reduce your EMI. Following these prudent measures can reduce your existing personal loan EMI and interest rate. However, before making any changes to your loan, read the terms and conditions of your loan agreement and consult with your lender.