While the loan is considered as one of the best options for buying a dream home or any other costly product, it sometime may land an individual into financial difficulties when he/she is not able to pay Equated Monthly Installments i.e. EMI. This situation can arise due to multiple reasons may be increase of monthly expenses, medical emergency, higher education etc. So, in order to tackle such stressful situations, an EMI Free loan appears to be boon for working professionals.
What is EMI Free Loan?
An EMI Free Loan does not include the principal amount of the loan. It means that in such type of loans an individual just has to pay the interest. Under normal loans where both Principal amount and interest has to be paid as EMI by the loan borrower, in an EMI free loan, the borrower can pay the principal amount as per his/her own convenience may be quarterly, yearly, bi-yearly or in the lump sum at the end of the loan tenure.
Regular Loan tenure is basically for 30 years, on the other hand, the tenure period for EMI free loan ranges from 1 year to 5 years. Also, such loan requires minimum paperwork and the whole loan amount is transferred in just 36 hours to the loan borrowers account.
So, if we took this term from a common man’s perspective, it can be understood that when you don’t have to pay the principal amount monthly, the loan percentage will automatically decrease to somewhere around 40%. This shows the cost-effectiveness of EMI free loan on the regular loans.
Benefits of taking an EMI Free Loan
As written above also that an EMI free loan cost around 40% less than the normal loan, so if you need urgent money, and you are not able to pay your EMI that in such types of loan you don’t have to panic.
Also, when an individual is free from the burden of monthly EMI then he/she can also save them from becoming a defaulter and chances for good credit score increases too.
Let’s understand this with an example:
Suppose ‘A’ takes a personal loan of 2 lakh with an interest rate of 15%, so he has to pay a regular monthly EMI of Rs. 4756 to the bank. On the other hand, ‘B’ takes an EMI Free loan of the same amount at an interest rate of 18%. So in this case, ‘B’ has to pay just Rs 3000 as monthly payment while the principal amount can be paid later when ‘B’ feels financial stability.
Regular Loan vs EMI Free loan: The Difference
The biggest and the most beneficial difference between the two is that in case of Regular Loan where the larger portion of EMI amount involves both the interest paid and principal amount. In case of EMI free loan, one just has to pay the interest and the principal amount can be repaid later.
Also, it is one of the most flexible loan products available in today’s financial landscape where there are no prepayment charges if you want to close the loan earlier. On the other hand in other loan products whether home or personal, you have to pay a certain amount if you want to foreclose the loan account early.
How to avail EMI Free Loan?
Such loans can easily be available from any banking institution or an online lending platform. Al you need is to just fill the EMI free loan application form with all the necessary details along with submission of important documents. Once the submission is done, banks will verify all the documents and complete the paperwork. Read all the terms and conditions carefully as provided by the bank. After the approval from the bank, the amount will be disbursed to the borrowers account in the next 36 hours.