Rising EMI burden
Paying high EMIs with high-interest rates on personal loan creates pressure on the borrower. Some of us can not manage to pay such a high amount and end up requesting for an increase in loan tenure. This plan might be considered as the option to curtail the burden, but somehow a large sum is paid as an EMI. Re-adjusting the loan tenure is a temporary relief of the problem.
To calculate your EMI: Use EMI Calculator
1) So a wiser choice is applying for a balance transfer. This procedure will help to shift your loan to another lender. Every lender has its norms; some of them don’t have any pre-payment penalty on variable floating rate loans. Therefore, the processing fee is the only added cost that is to be paid by the borrower.
If the processing fee is low, it’s advisable to transfer your loan. So if you have the option where the other lender lends you a 5% difference with the previous one, it is advisable to go for it. It will save an amount of 1.9 lakh on a 20-year loan of 20 lakh home loan.
2) You can also prepay the loan if you are at a later stage of the loan term. You must have paid most of the interest rate on personal loans and would be repaying the principal amount. Therefore, the rate hike would have a slighter lesser impact.
If you are in a situation where you pay the loan amount for the short term, it is advisable to cut your expenditure and pay the sum as soon as possible.
Special Note: An individual must examine the whole EMI amount payable to the lender with the Personal loan EMI calculator.
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