Instant money loans havecompletely transformed the financing landscape of India. Today, with easy availability, simple processing, minimal documentation and high affordability, instant cash loans have become the go-to financing tool to meet all kinds of financial needs. Whether it is an aspiration need like buying a phone or an emergency need like meeting your medical expenses, an instant money loan can come to your aid.
However, the consequent rise in repo rate from the RBI has subjected these loans to the pressure of decreased affordability. Individuals are thus looking for ways to surpass the overall hike in rates to secure the lowest rates possible on these instant cash loan.
There are several smart tips that can help you negotiate the interest rate with your lender. But if you have already availed the loan at a high interest rate, then reducing your interest burden can get a bit tricky. However, it is possible.Several smart financial initiatives can help reduce the EMIs payable and improve the overall loan affordability.
Read on to discover a list of possible solutions to reduce the interest payment on your instant money loan.
8 Best Solutions to Reduce Your Personal Loan Interest Payments
1. Make part-prepayment of your loan with a lump sum funding
The personal loan repayment schedule ideally involves repaying the liability through EMIs. Your EMI comprises the principal and interest components in parts. But if your financial availability supports, you can also choose to part-prepay your loan in a lump sum at any time before the tenure ends. This helps bring down the principal, which in turn lowers your interest accrual.
2. Foreclose your loan account
You can also choose to foreclose your instant money loan account before the tenure’s end through complete prepayment of the loan liability. This also helps save on total interest accrual significantly. For both part-prepayment and foreclosure, make sure to time them correctly. Also, check if the interest savings outweigh the cost of such prepayment for optimal savings.
3. Increase your EMI payout
Another way you can save on interest payment of your instant cash loan is by increasing the amount of EMIs you pay every month as against the initially agreed amount. It helps complete the repayment early and shortens the tenure, thus saving on your interest liability.
4. Make bi-monthly repayments
You also have an option to deflect from the suggested repayment schedule and choose a bi-monthly repayment module for your instant money loan. This helps break down the repayment liability into smaller amounts. As a result, it allows you to manage your repayments well while saving on the total interest payout.
5. Submit additional documents with any income increase and negotiate
The rate levy on your personal loan initially determined based on your income capacity. However, if you have had any new income sources or your total income increased meanwhile, you can document such increase with your lender. Accordingly, you can negotiate with them for a lower rate of interest. If your lender agrees for such rate reduction, your overall interest liability will automatically decrease.
6. Consolidate multiple debts in one
If you are servicing multiple loans at high rates of interest, a great way to bring down the total interest outgo is to consolidate these debts into one. You can do so by borrowing a new personal loan at a lower average rate. You can then repay all the existing dues with the amount availed and have one single EMI to pay. This also helps reduce the hassle of managing multiple loans.
7. Choose the balance transfer facility
You can also choose the balance transfer facility for your instant money loan that allows you to switch your outstanding loan balance to a new lender offering a low rate. It helps re-draft your loan agreement with favourable terms, a low rate levy being one of them. It thus helps save on your overall interest outgo ultimately.
Apart from these steps, you can also request your lender to switch the interest levy method from floating to fixed or vice versa. You can choose between the two depending on the levy trends in the market to save on your instant money loan interest. Ideally, for the current lending scenario of rising interest rates, it would be useful to switch from floating to fixed rates. Doing so can help you hedge your loan from the market fluctuations. You must also not miss out on any repayment schedule as it unnecessarily burdens your finances with penaltycharges and also stains your repayment history.