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Tata Capital > Blog > Personal Use Loan > How To Reduce The EMI Of Your Existing Personal Loan?

Personal Use Loan

How To Reduce The EMI Of Your Existing Personal Loan?

How To Reduce The EMI Of Your Existing Personal Loan?

“Timely return of a loan makes it easier to borrow a second time”. This Chinese proverb very rightly captures the true essence of a loan.

Since the Covid-19 pandEMIc, the demand for credit, especially personal loans, has surged in India. Personal loans emerged as the third-most availed retail loans in FY21 in the country, accounting for 11.7% of the category loans disbursed in the last fiscal year. 

A personal loan can be used for various purposes, such as for meeting wedding expenses or medical emergencies. It can also come to the rescue when one needs to go on an unplanned trip, finance their child’s education, or renovate their home! A personal loan can be used for any individual purpose.

Taking a loan at times is essential, and so is its repayment. And the good part about this is that there are a number of ways to reduce EMI liability, and as an aware borrower, one must know and make use of them. But how to reduce the EMI of a personal loan?

Worry no more! In this article, we bring you the best tips on reducing the EMI of existing personal loans. Read on to know more!

6 Tips on How to Reduce EMI of Existing Personal Loan

Given below are the six most effective ways will help one know how to reduce personal loan EMI:

1. Make Sure the Loan Amount is Right

The Equated Monthly Installment (EMI) of a loan is directly proportional to the personal loan amount. That is, one needs to pay a certain percentage of the loan and interest as the EMI. Therefore, if the borrower has taken a personal loan of a higher amount, they need to pay a higher EMI and vice versa.

One of the most fundamental, straightforward, and practical answers to the question of how to reduce the EMI of a personal loan is to choose the loan amount correctly. One must remember that one should borrow only the necessary amount. People often get swayed away and take a higher loan than required just because their credit score allows it.

Remember not to do so because this can unnecessarily increase one's debt liability. Always plan your expenses and avail of a personal loan, the repayment of which fits your budget comfortably.

2. Select the Loan Tenure Correctly

Another effective way in which one can resolve their concern on how to reduce personal loan EMI is via loan tenure. The amount of EMI payable by one for the repayment of their loan inversely depends on the term of the loan. That is, the longer the tenure, the lower the EMI value; the shorter the tenure, the higher the EMI amount.

Thus, if one cannot afford to pay massive amounts as EMIs, they must go for a longer tenure. This helps keep the EMI payment within the budget without worrying about how to make ends meet.

3. Make Use of a Personal Loan EMI Calculator

Nowadays, it is highly convenient and quick to get a personal loan. However, one should never make a financial decision in haste. It is always advisable to do all the financial calculations beforehand and then avail of credit. Also, this is one of the easiest tips for reducing the EMI of an existing personal loan!

One must calculate their EMIs before taking a personal loan. This can be done quickly and instantly using our Personal Loan EMI Calculator. All one needs to do is enter the amount of personal loan they wish to avail, the loan tenure, and the rate of interest payable on the credit. And the EMI amount will be displayed! 

Using the personal loan calculator is very useful as it helps one to know their EMIs, avoid the risk of manual calculation errors, and make an informed decision about their finances.

4. Pay EMIs on Time and Without Fail

Are you still wondering how I can reduce my loan EMI? Don't worry. This can be done one more way - by paying EMIs on time! Now, how does paying EMIs on time affect the EMI amount?

This is because the interest one pays on a loan depends on the creditworthiness captured in their credit score. If one fails to pay their loan EMIs on time, this would reduce their creditworthiness for the lender and degrade their credit score. And this may result in a higher interest rate on future loans.

Moreover, a delay in the payment of personal loan EMIs may attract late payment penalties by the existing lender. One can avoid missing their EMI due date using an automatic payment mechanism with their bank. However, it is necessary to ensure an adequate balance of funds in the bank account at the time of the EMI due date.

5. Merge Multiple Loans Using Personal Loan

One often takes multiple loans from different lenders to fulfill their financial requirements. However, this can be difficult to manage plus expensive on the pocket as different interest rates may be chargeable on other loans. 

Well, one way to do away with handling multiple loans is by taking up a personal loan. One can use a personal loan to pay off the existing loans so that they have only one outstanding credit.

This helps in better management of credit, payment of only one interest rate, and a lower probability of missing out on the EMI due date.

6. Choose Personal Loan Reducing Rate of Interest

If you often ask yourself how can I reduce my loan EMI? Then you must know that there are primarily two ways in which the interest rate can be levied on a personal loan - a flat rate or a personal loan reducing interest rate. Under the flat rate, the EMIs get calculated at the time of loan sanctioning based on the total loan amount.

However, under a personal loan reducing interest rate, the EMIs are calculated basis only on the outstanding loan amount. That is, this rate of interest takes into account the repayments made towards the availed loan. Choosing the reducing rate of interest can thus help one reduce their EMI liability.


A personal loan is a great financial tool that helps one meet both expected and unexpected financial obligations. And there are various ways, as listed above, in which one can reduce their personal loan EMIs. But, if you are still wondering how to reduce the EMI of an existing personal loan, then feel free to get in touch with the professionals at Tata Capital. Or visit our website to learn more about personal loans!

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