Digital Banking

Smart Borrowing: How to Use Personal Loans and Manage EMIs Wisely


With the advancement of the banking sector, it has become easy to get a loan for all kinds of needs. Moreover, for middle-class people, it becomes difficult to survive on a regular income. So, for extraordinary expenses like buying a new car, a wedding etc. they arrange finance through personal loans.

Getting personal loans has become easy but managing the payments of personal loans is difficult. So, when you plan to take a new personal loan then do have a proper plan to pay your EMIs wisely. Even a single bounce in EMI can affect your credit score.

EMI calculator available online can be used to calculate the EMI of the personal loan. In this article, we will understand how can we manage personal loan EMIs in a smart manner.

What is a Personal Loan?

Personal is one type of unsecured credit offered by banks and NBFCs. You don’t have to provide any collateral to avail a personal loan. Just by giving basic documents like KYC and bank account statements, you can get a personal loan.

A personal loan is given on the basis of your income, age, profession, and credit history. There is no restriction on personal loan usage. You can use it as per your need i.e., for medical emergencies, weddings, home renovation etc.

EMI calculator shall be used to compare personal loans offered by various banks and NBFCs. This will help you to get the loan at the best possible interest rate.

Benefits of Personal Loan

Some of the top benefits of a personal loan are as under: –

  • Hassle-free Process

The process of getting a personal loan is very easy. You can apply for personal online through net banking, through the app or by visiting the branch of the bank or NBFC. They will collect documents, verify them and approve your loan in a few hours.

  • No Collateral

In a Gold loan, you need gold as collateral. In a mortgage, your property is kept as collateral. However personal loans are unsecured loans. So, you don’t require any collateral to get a personal loan.

  • Minimum Documentation

You require a lot of documents to avail of home loans, mortgage loans etc. But in personal loans the documentation is minimal. Just by providing basic KYC documents you can get the loan.

  • Flexible Tenure

Personal gives you the flexibility of tenure. You can select the tenure at your convenience. Generally, the tenure of personal loan ranges from 1 year to 5 years. You can opt for the tenure as per the EMI you can afford.

  • Quick Approval

The process of approval for a personal loan is very fast. You get the amount credited to your account within 24-48 hours of a loan application.

Tips to Manage EMIs Wisely

Everyone takes personal loans these days. But not everyone is able to manage it properly. If you plan the repayment of your loan properly then you can avoid late payments. Here are some tips to help you manage your EMI wisely.

  • Create a Budget

Proper budgeting can help a lot in managing finances. Track your monthly expenses and create a budget for the same. Allocate a fixed amount of your income towards EMIs. This will make you pay your EMIs on time and avoid any bounces.

  • Choose Tenure Wisely

The tenure of your loan will decide your EMI. So, keep the tenure such that the resulting EMI is affordable to you. Keep shorter tenure.

This will have a bit high EMI but it will complete your loan faster. It’s always advisable to clear the debt as soon as possible.

  • Make use of an EMI calculator

There are so many lenders offering you a personal loan. It becomes difficult for a borrower to decide which lender to select. EMI calculator can be used for this purpose

You can compare the repayments as per the interest rate offered by various lenders through the EMI calculator. Select the one which has the lowest overall repayment.

  • Pay EMIs on Time

Always pay EMIs on time. Even a single bounce of EMI can affect your credit score negatively. So never miss the EMI payments. You can automate the payments by opting for SI through banks.

  • Avoid New Debt

If you are already having multiple EMIs to pay on loans, then avoid taking any new loans. Taking more debt will increase your debt burden. This will lead to a debt trap. So, plan properly your loans properly and pay the existing ones first.

  • Pay High-Int Loans First

If you have multiple EMIs running then you need to prioritise your EMIs. Pay high-int loans first as they increase the debt. By paying off high-int loans you can reduce your overall debt burden.

  • Increase EMI with Rise in Income

An individual’s income increases every year. With the rise in salary, you shall increase the amount of your EMI. This will help you to clear the debts faster.

  • Keep an Emergency Fund

An emergency fund is a fund created that can be used by you in emergencies. In order to plan out your EMI properly it’s necessary to have an emergency fund. So that during emergencies you don’t face financial burdens and miss out on EMI payments.

  • Use Bonus to Pay Debts

An employee receives a bonus from the employer at least once in the year. Salespeople receive incentives for achieving targets. Even businessmen earn extraordinary profits during certain seasons.

Avoid spending this extra money earned on buying a new phone or going on a vacation. Instead of this use this money to pay off your debts. Costly credit card bills and personal loans shall be paid off through this money received.

  • Consolidate debts

If you are paying multiple EMIs of multiple loans, then you can consolidate all this debt in a single EMI. Get a low-interest loan from a bank, and pay off all these debts. Now you just need to pay a single EMI of the loan taken for consolidation of debts.

  • Make Lifestyle Changes

You may also need to make a bit of your lifestyle changes to manage the EMIs properly. This will help you to pay your EMIs on time and avoid any bounces. Lifestyle changes can be like reducing movie outings, dining out and weekend parties.

Reducing the use of credit cards while going shopping. Such small lifestyle changes can help you a lot in managing finances.


Personal loans are easily available these days. So many people take personal loans when the need arises. But paying regular EMI of personal loans is also necessary. By following above mentioned tips you can manage your EMIs efficiently.

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