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Home and car loans get expensive: Should you increase EMI or tenure to save money?
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News18•13-10-2026, 22:07
Home and car loans get expensive: Should you increase EMI or tenure to save money?
- •The Reserve Bank of India hiked the repo rate to 5.50 percent, prompting major banks like HDFC, PNB, Bank of Baroda, and Indian Bank to raise their lending rates.
- •Borrowers facing higher interest rates can either increase their monthly EMI or extend their loan repayment tenure to manage their budgets.
- •Increasing the loan tenure to keep EMI low acts as slow poison, significantly increasing the total interest payout by lakhs of rupees over time.
- •Experts recommend increasing your EMI by 10 percent if you have a stable income, which can help finish the loan years earlier and save massive amounts in interest.
- •Borrowers should evaluate their monthly budget, emergency funds, and age before making a choice, opting for pre-payments whenever possible to reduce the financial burden.
Key Questions Answered
The Reserve Bank of India has hiked the repo rate to 5.50%.
If you have a regular income and sufficient emergency savings, increasing your EMI or making prepayments saves on total interest. If your cash flow is very tight, you can temporarily increase the loan tenure to reduce monthly budget pressure, though it significantly increases total interest costs.
According to Paisabazaar, increasing your EMI by 10% on a ₹50 lakh 20-year loan allows the loan to end in 16 years instead of 20, saving ₹12.5 lakh in interest.
