Is It Feasible to Pay More Than The Said EMI Amount For a Personal Loan?

Mar 12th 2024
Loan
Pay More Than The Said EMI Amount For a Personal Loan

Is it feasible to pay more than the said EMI amount for a personal loan? It is very empowering to be able to easily obtain credit when you need it. Anybody's life can significantly benefit from being able to obtain money quickly to cover urgent needs and return it over time in manageable payments.

If your monthly expenses are modest but your credit responsibility is high, you may use equal monthly installments, or EMIs, to receive fast credit approval and then pay back your loan over time in manageable installments. On the other hand, you will pay more interest the longer the payback period. Nonetheless, if you have extra money to spare, you may greatly lessen the repayment load by making advance EMI payment against the personal loan. 

There are basically two types of EMI payment – regular and advance. Let’s get to know them in detail below.

Regular EMI Payment

The most popular kind of EMI payment is regular EMI, in which the borrower makes monthly EMI payments for a predetermined length of time called as the loan tenor or payback tenure. Repayment of the loan doesn't start until the full principle amount has been credited to the borrower's account. The principle and interest amount are included in the equivalent monthly installment component for the regular EMI payment option. During the designated payback period, the amount of EMI is fixed.

Read More: Can I Expect to Get a Personal Loan With a Salary of INR 14000 Per Month?

Advance EMI Payment

Borrowers who have extra money to pay their EMIs in advance might choose to pay their EMIs in advance. These days, this kind of loan is provided by several NBFCs and prestigious banks. Your repayment bank account won't be debited for monthly EMIs against the relevant time if you select the advance EMI payment option. However, since the amortisation schedule won't change, making an advance EMI payment won't have any impact on the loan interest rate.

Main Benefits of Paying Advanced EMIs

  • The majority of financial lenders let you pay your advance EMI in a simple, hassle-free manner. To choose the best EMI choice for you, examine the benefits of several alternatives by visiting the websites of banks or NBFCs.
  • You have the option to pay your advance EMI with a debit card, UPI, or net banking, whichever is your chosen method of payment.
  • Online loan applications with an advanced EMI payment option are available. In terms of the loan application procedure, the majority of banks these days have totally moved to an electronic format.
  • You can lessen the stress of monthly EMI repayment by choosing to pay in advance. You may make an early EMI payment since you have more money available.
  • You must pay your lender more interest the longer the loan term. You can shorten the length of your loan by making your EMI payments in advance.

Read More: Common Mistakes To Avoid When Availing A Personal Loan

Which type of interest rate is better, advance or arrear?

The alternatives of advance and arrear EMI are both beneficial, but the best option for you will depend on your financial circumstances. For instance, use an arrears EMI plan to lessen the stress of the first down payment if you are on a limited budget. On the other hand, if money is not an issue for you, go for advance EMI payment as it lowers the principle.

Also Read: How Can I Pay Personal Loan EMI Through Credit Card?

FAQs

What Does an EMI Mean?

Equivalent monthly installment, or EMI for short, is the monthly payment we must make on the loan we have taken out. Contributions to the principle and interest on the whole loan amount are included in the monthly EMI payments.

What is a Loan Amortisation Schedule?

You obtain a loan amortisation schedule from the financial lender once your loan is approved. A loan amortisation schedule is a table that shows the total amount borrowed together with the monthly interest payments scheduled for the whole loan term.

What Are The Two Types of Loan Interest Rates?

The two types of loan interest rates are fixed and floating.

The Conclusion

Today's market offers a variety of products that make it simple to obtain credit. One of the best things about the contemporary financial system is that it allows you to raise your spending limit even when you have a little monthly budget. More flexible repayment alternatives are being offered by banks and financial lenders more frequently to facilitate credit availability and loan payback for consumers. As a customer, you can choose to pay your EMI in advance or back in accordance with the standard procedure. But while deciding between the two, be sure to only go with the advanced EMI payment option if you have enough extra money to cover the advance EMI and personal loan.

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