Opting for a personal loan to meet cash requirements is a common phenomenon. All loans need to be repaid in a said pattern and prescribed time. On borrowing a sum, the lender provides you a repayment schedule on the basis of which you would make payments in order to gradually pay off the loan in the form of monthly installments. 

Most traditional lenders offer a fixed repayment schedule for the borrowers. In other words, you would be paying a fixed EMI every month. However, few lenders offer new, pocket-friendly repayment plans to fuel personal loans with added flexibility. 

With the intent to minimize the load of EMIs on the monthly cash flows of millennials, LoanTap has devised various repayment plans to choose from. To understand these repayment plans we have penned down a detailed guide to assist you while choosing the offers customized for you!

What is a Repayment Plan? 

Let us assume that you borrowed a sum of INR 1,00,000 (principal loan amount) at a flat rate of interest of 18% per annum for a tenure of 12 months. You are liable to repay the principal amount as well as the interest amount to the lender i.e, INR 1,00,000 + INR 18,000(interest outgo). This sum of INR 1,18, 000 is broken down into smaller installments (EMIs) and are spread out throughout the loan tenure. As mentioned, most lenders offer a fixed repayment plan where you pay a fixed EMI every month for the duration. However, here we have customized different personal loan repayment plans so that you can choose the structure of your monthly installment plan and the offer that best compliments your cash flow cycles. 

What are the different  Loan Repayment Plans offered? 

1. Step Up Repayment Plan 
This is a flexible repayment option that offers you a chance to enjoy interest only payments (applicable on loan’s outstanding amount) for the initial three months followed by fixed EMIs for the rest of the loan tenure. Since you pay only interest and thus lower installments for the first few months, you have more liquidity to deal with the expenses incurred for an event. It helps reduce the monthly cash outflow when you need it the most. 

Let us assume that you have borrowed a loan of INR 1,00,000 for 12 months at 18% p.a., interest rate to meet medical expenses. Your initial 3 months installments will comprise of only interest payment (i.e. INR 1500) which is lower than a regular EMI by 40%. Thus, in the initial few months, you would have more liquidity to deal with the blow of heavy medical expenses incurred.

The principal repayment will begin from the 4th month and will spread out for the remaining tenure just like a term loan. If you see the table below, you will notice that the interest is calculated on a reducing basis. Once you have made an EMI payment, which consists of both Principal and interest components, the interest is calculated every month on the  principal outstanding. 

Step Up Personal loan Repayment Schedule – 

This is a flexible repayment option that offers you a chance to enjoy interest only payments (applicable on loan’s outstanding amount) for the initial three months followed by fixed EMIs for the rest of the loan tenure. Since you pay only interest and thus lower installments for the first few months, you have more liquidity to deal with the expenses incurred for an event. It helps reduce the monthly cash outflow when you need it the most. 

Let us assume that you have borrowed a loan of INR 1,00,000 for 12 months at 18% p.a., interest rate to meet medical expenses. Your initial 3 months installments will comprise of only interest payment (i.e. INR 1500) which is lower than a regular EMI by 40%. Thus, in the initial few months, you would have more liquidity to deal with the blow of heavy medical expenses incurred.
The principal repayment will begin from the 4th month and will spread out for the remaining tenure just like a term loan. If you see the table below, you will notice that the interest is calculated on a reducing basis. Once you have made an EMI payment, which consists of both Principal and interest components, the interest is calculated every month on the  principal outstanding. 

Step Up Personal loan Repayment Schedule – 

Installment No. Opening POS Interest Installment Principal paid Closing POS
1 100,000 1,500 1,500 100,000
2 100,000 1,500 1,500 100,000
3 100,000 1,500 1,500 100,000
4 100,000 1,500 11,961 10,461 89,539
5 89,539 1,343 11,961 10,618 78,921
6 78,921 1,184 11,961 10,777 68,144
7 68,144 1,022 11,961 10,939 57,205
8 57,205 858 11,961 11,103 46,102
9 46,102 692 11,961 11,269 34,833
10 34,833 522 11,961 11,438 23,394
11 23,394 351 11,961 11,610 11,784
12 11,784 177 11,961 11,784 -0

This repayment plan is best suited for individuals who have a short term cash crunch and are certain that they would have the liquidity after a few months. 

2. Term Repayment Plan (Reducing Interest Rate) 
In this repayment option, the EMI is calculated with a reducing interest rate method. Initially, the interest is charged on the entire principal outstanding amount. While you further service your loan and pay EMIs, the Principal outstanding reduces. The interest is then recalculated on the remaining outstanding amount. This process is carried out after every EMI payment.

For instance, you have borrowed a sum of INR 1,00,000 for a tenure of 12 months at 18% p.a. interest rate on a reducing basis. Your interest outgo will sum up to INR 1500 every month while your total EMI will be INR 9,168. Once you make an EMI payment towards your principal outstanding, the interest will be freshly calculated on the remaining outstanding amount (i.e., INR 92,332) which would sum up to INR 1,385. As you can see below, your interest outgo reduces every month along with the principal outstanding amount. 

Personal Term Loan Repayment Schedule – 

Installment No. Opening POS Interest Installment Principal paid Closing POS
1 100,000 1,500 9,168 7,668 92,332
2 92,332 1,385 9,168 7,783 84,549
3 84,549 1,268 9,168 7,900 76,649
4 76,649 1,150 9,168 8,018 68,631
5 68,631 1,029 9,168 8,139 60,492
6 60,492 907 9,168 8,261 52,232
7 52,232 783 9,168 8,385 43,847
8 43,847 658 9,168 8,510 35,337
9 35,337 530 9,168 8,638 26,699
10 26,699 400 9,168 8,768 17,932
11 17,932 269 9,168 8,899 9,033
12 9,033 135 9,168 9,033 -0

This repayment plan is best suited for individuals who desire to have a fixed outgo towards their EMIs every month. This reduces the uncertainty of different EMI amounts and calculations. 

3. EMI Free Repayment Plan 
This repayment option offers you the benefit of paying only interest (applicable on loan’s outstanding amount) every month and making partial bullet payments towards principal outstanding every 3/6 months. After every bullet payment, interest outgo is recalculated on the remaining outstanding amount. It further reduces the interest from the following month.

For a loan of INR 1,00,000 & tenure of 12 months at 18% p.a. interest rate, you are accountable to pay ‘only interest’ of Rs.1500 every month, and the applicable bullet amount of INR 50,000 would be payable every six months. Every bullet payment further reduces the principal amount and in turn reduces monthly interest outgo towards the loan.

MI Free Personal Loan Repayment Schedule – 

Installment No. Opening POS Interest Installment Principal paid Closing POS
1 100,000 1,500 1,500 100,000
2 100,000 1,500 1,500 100,000
3 100,000 1,500 1,500 100,000
4 100,000 1,500 1,500 100,000
5 100,000 1,500 1,500 100,000
6 100,000 1,500 51,500 50,000 50,000
7 50,000 750 750 50,000
8 50,000 750 750 50,000
9 50,000 750 750 50,000
10 50,000 750 750 50,000
11 50,000 750 750 50,000
12 50,000 750 50,750 50,000

This repayment plan is best suited for you if you get incentives or an increased income every 3/6 months.. It reduces your monthly cash outgo as compared to regular EMI by 40%. 

4. Overdraft Repayment Plan
Overdraft facility is a credit line offered to a borrower for a fixed tenure and amount. With this repayment option, you can make multiple withdrawals up to an agreed limit set by the lender. Every time you repay back the amount borrowed, the credit line is replenished. The benefit offered by this facility is that you can make multiple withdrawals and repayments, and are liable to pay interest only on the amount you withdraw. It is as convenient as a credit card. You pay zero interest on the amount that is lying unused in your Overdraft (OD) account. The interest calculation is made based on the amount of money you withdraw and for the number of days you utilise the amount. 

For Instance, you choose a Credit Line for a sum of INR 2,00,000 for 12 months at 18% p.a., interest rate; and you withdraw INR 1,00,000 for 5 months, you are liable to pay INR 1500(interest) every month for 5 months. This payment pattern continues until you repay back the withdrawn amount in the OD account.

Overdraft Repayment Schedule – 
(Assuming the Borrower uses the entire amount for 12 months)

Installment No. Opening POS Interest Installment Principal paid Closing POS
1 100,000 1,500 1,500 100,000
2 100,000 1,500 1,500 100,000
3 100,000 1,500 1,500 100,000
4 100,000 1,500 1,500 100,000
5 100,000 1,500 1,500 100,000
6 100,000 1,500 1,500 100,000
7 100,000 1,500 1,500 100,000
8 100,000 1,500 1,500 100,000
9 100,000 1,500 1,500 100,000
10 100,000 1,500 1,500 100,000
11 100,000 1,500 1,500 100,000
12 100,000 1,500 101,500 100,000

This repayment plan is best suited for you if you are uncertain about how long you would need the funds and how much you would require. Choosing this personal loan repayment schedule will assure that you have the funds at your disposal whenever you need it. 

These Personal loan EMI schedules clearly demonstrate the monthly EMI outflow towards your personal loan. You can use the Personal loan EMI calculator to calculate the EMIs by choosing the loan amount and tenure of your choice. And Yes! Do not forget to carry out the Personal loan Eligibility checks before applying for a loan. 
On applying for a personal loan, LoanTap customises various offers that best suit your profile. Each Offer comes with a different repayment schedule. We give you the liberty to choose the repayment plan with which you would like to service your loan throughout the tenure. This facility helps you decide the offer that would help you manage your monthly cash flows conveniently.

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