Four Things You Must Know if You Pay Pre-EMI on Personal Loan
Have you applied for a personal loan of Rs.10 lakh but found the equated monthly installment(EMI) amount to be very high? Ask yourself whether you need such a big amount now or over a period of two to three years. If you want the loan over a period of time, your EMI amount can come down. The good news is that that there are lenders who can tailor the loan according to your needs. Such loans are known as flexi loans. These loans offer the pre-EMI facility. So, let’s see how this facility works:
For a Personal Loan, the pre-EMI is applied only to the amount of loan that you use. For example, the lender approves you an instant personal loan of Rs.10 lakh. But you choose to take out Rs.2 lakh initially. So, you pay a pre-EMI on the Rs.2 lakh loan and not Rs.10 lakh. The principal component can be repaid later as per your convenience.
However, there are certain things you should keep in mind before you opt for a pre-EMI facility. They are:
Check Your Cash Flow
Utilize the loan amount as per your cash flow position. Opt for a pre-EMI facility when your monthly savings are not enough to pay for the full EMI. The pre-EMI option can give you some breathing space as you pay interest on the loan utilized. A non-bank finance company (NBFC) like Bajaj Finserv can help you reduce monthly cash outgo by up to 45%.
Charges
You are likely to pre-close a Personal Loan when there is surplus cash available. However, you may require a personal loan again in the future. It means you go through the process of loan application again and pay processing charges too. A pre-EMI can help you avoid this. Some lenders allow you to borrow and repay the loan in multiple times with one application. This helps you saving fresh loan charges.
Save Time
There is a time gap between loan processing, approval, and disbursal. A Pre-EMI option allows you to avoid all of them as you can borrow and repay multiple times as per your needs. This saves time as the loan amount directly gets credited to your account whenever you need it.
Pre-Closure
Make sure you read the terms and conditions mentioned in the loan document. Some lenders may or may not allow you to pre-close the loan when you pay the Pre-EMI. This can help you plan finances accordingly.
To Sum Up
The Loan Calculator is an online tool tha0t helps you to determine your EMI outflow. You can use it to plan the loan amount you want to apply for. A pre-EMI facility is certainly an attractive option for those who don’t have sufficient cash at the moment. However, you should opt for it only when you need it.
Must Read: Find Out How Much EMI You Will Have To Pay On Your Personal Loan
