Traditionally, a personal loan came in a standard form. If you met the personal loan eligibility criteria, you were required to provide the necessary documentation, and you would get the required loan amount. Depending on the personal loan interest rates, you had to pay an EMI that included principal and interest payments. Based on the calculations given by a standard personal loan EMI calculator, the EMI would be spread across the loan’s tenure. However, Flexi EMI personal loans are somewhat different. In this blog, we will understand these loans and their benefits in greater detail.
Flexi EMI Personal Loans Explained
As mentioned above, standard EMI options have a fixed EMI throughout the loan tenure. For example, if someone who meets the personal loan eligibility criteria takes a loan of Rs. 1,00,000 at an interest rate of 10.99% per annum for 2 years. Their monthly EMI will be Rs. 4,660 for the entire tenure (2 years). This option works for people who expect their income to be fixed (standard).
On the other hand, suppose someone has taken on a new role at a low salary. However, based on the potential of their work profile and the market demand for their skills, they are confident they will see a growth in income over the next 2 years. A Flexi EMI option is suited for such borrowers.
In a Flexi EMI option, the amount of EMIs may vary throughout the term. During the early part of the loan, the EMIs will be lower. As the tenure progresses, you pay higher EMIs. A Flexi EMI allows you to repay a higher amount when you can afford to do so.
The loan process remains the same. If you meet the Flexi EMI personal loan eligibility criteria, the loan amount is disbursed, and monthly EMIs begin. The only difference is initially, the monthly EMIs are lower, and they increase with the tenure of the loan.
Benefits of Flexi EMI Personal Loans
Lower Burden of EMI
Flexi EMI loans give you the option of choosing a lower EMI. Borrowers can work out all their other financial commitments and decide how much EMI they want to pay in the initial stages of the loan.
Lower Interest Rates:
Typically, Flexi EMI personal loan interest rates are lower than regular loans. However, as mentioned earlier, under standard EMIs, the EMI amount remains the same. Borrowers can benefit from the lower personal loan interest rates offered by Flexi EMI loans, provided they are confident of a rise in income.
Flexi EMI personal loans are suited for those who expect a hike in their income or some windfall, such as bonus payments, at a later period during the loan’s tenure. They can benefit from the ease of paying lower EMIs in the initial stages and pay higher EMIs when they can afford them. However, for those who do not expect a hike in income, it is advisable to stick to standard EMIs. While Flexi EMI loans may provide lower EMIs initially, you will have to bear the burden of higher EMIs towards the end of the loan’s tenure. The burden is even more if your income is not stable or is not growing substantially.
Calculate your personal loan eligibility to get started.