Loan EMIs ruining your household budget? Get permanent freedom from debt with these 4 magical methods

How to reduce Loan EMI: The heavy EMIs of bank loans have become a burden on the budgets of many families today. Whether it's a home loan or a personal loan, the cycle of interest often seems never-ending. But with the right financial planning and some smart methods, you can not only reduce your installments but also become debt-free ahead of time.

How to reduce Loan EMI: In today's world, taking out home loans, car loans, or personal loans has become a necessity to improve one's lifestyle. Initially, everything seems fine, but after some time, the bank's monthly installments (EMIs) become a major burden. Many people spend half their lives just paying interest. If you are also trapped in this debt cycle, don't worry. Here are some practical tips that can make you debt-free ahead of time.

Make savings and bonuses your weapon

The most straightforward way to reduce the burden of a loan is through 'prepayment'. Whenever you receive a Diwali bonus, a tax refund, or an old FD (Fixed Deposit) matures, instead of buying new things with that money, pay off a part of your loan. Doing this directly reduces your principal amount, which automatically reduces the interest for the coming months.

Develop the habit of increasing your EMI

As your salary or business income increases, keep increasing your EMI amount as well. If you increase your EMI by just 5-10% every year, your 20-year loan can be paid off in just 12-15 years. A shorter loan term means paying less interest to the bank, which is a direct benefit for your pocket.

Make a large payment once a year

One psychological way to pay off your loan quickly is to aim to pay a large amount (at least 20% of the total loan) in one go every year. When you deposit a lump sum, the interest meter on the loan slows down considerably. This method is ideal for those with a good annual income (including variable pay).

Keep a close eye on interest rates

Always keep an eye on the market to see which bank is offering the cheapest loans. If you feel your current bank is charging too much interest, you can opt for a 'loan balance transfer'. Shifting your loan to another bank with a lower interest rate will reduce your monthly EMI and increase your savings. Just be sure to factor in the processing fees before making the switch.

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