How to get a higher loan at a lower EMI
Personal loans help us fulfil several financial and life goals. Most banks disburse various kinds of loans in a matter of hours. What’s more, the borrower has a good amount of control and flexibility in repaying the loan. As a borrower, you have the flexibility to choose your tenure and loan amount and accordingly adjust your Equated Monthly Instalments (EMIs). Consider these handy tips if you are looking to get a higher loan amount at a lower EMI.
Opt for longer repayment tenure on your loan: Your loan repayment tenure is inversely proportional to the EMI amount of your loan. Opting for longer repayment tenures allows you to disburse the total due amount over a longer time span, thereby reducing the EMI amount. However, it is important to understand that while your longer loan tenure comes with affordable, small amount EMIs, it also increases the rate of interest payable on the loan. You should only opt for longer repayment tenures if you think you cannot afford higher EMIs.
Choose to pay a higher down payment amount: Down payment refers to the amount paid by the customer while purchasing an item on loan. Most banks typically offer 85%-90% of the actual price of the product taken on loan, whereas the customer must bear the remaining 10%-15% and pay it as down payment. However, you can opt to pay a higher down payment amount, and reduce the total sum taken as loan. Remember that you only have to pay interest on the principal amount you borrow. A higher loan amount can result in you having to pay a higher interest and higher EMIs. Paying a large down payment can help reduce the EMIs and reduce the interest rates too.
Opt for a lower rate of interest: The rate of interest is one of the most important factors that affect the principal loan disbursed and the tenure of the loan. When you choose a lower rate of interest, you are also choosing a shorter tenure. If you believe that you can repay the loan faster, by paying off high EMIs, then you can opt for a lower tenured loan. A loan taken on a lower interest rate helps you pay off your debt faster.
Opt for balance transfer: If you have a high cost loan, you can opt for refinancing by taking out a lower cost loan. This is known as a balance transfer loan, which usually comes with a lower rate of interest. You could also take out a top-up loan on your high amount loan.
Consider your existing bank while taking a loan: Borrowing from a bank with which you have an existing relationship, can work in your favour as you may be able to negotiate the terms of the loan. If you have a good working relationship with your bank, you may be able to procure lower interest rates on your loan amount.
Click here to know how to calculate Emi for Personal Loan and how to lower it.
* Terms & conditions apply. Personal Loan disbursal at sole discretion of HDFC Bank Ltd.