Managing Multiple EMIs
If you already have multiple loans, prioritize paying off the highest-interest-rate loan first while maintaining minimum payments on others (the avalanche method). In practice for Indian borrowers:
- Pay off personal loans and credit card outstanding first (16%–36% rates)
- Then car loans (8%–12%)
- Home loans can run their full tenure — prepay only when you have genuinely surplus funds and the rate differential vs investment returns justifies it
If total EMIs exceed 50% of income, consider a debt consolidation loan — rolling multiple high-interest obligations into a single lower-rate loan (often a LAP) to reduce the monthly outflow and overall interest burden.
The EMI Buffer Rule
Before taking any loan, accumulate a dedicated EMI buffer of 3 months of EMI amount in a separate savings account that you do not touch for any other purpose. This single habit prevents the cascade that starts when one month's salary is delayed, or one unexpected expense arrives — and an EMI bounce triggers penalties, credit score damage, and lender notices.
For a ₹35,000/month home loan EMI, this means parking ₹1,05,000 in a sweep-in FD or liquid mutual fund before the loan starts. The interest earned on this buffer partially offsets the loan cost.
Plan Your Loan Budget with Finvastra
Before you apply for any loan, Finvastra advisors run a complete affordability analysis — FOIR assessment, EMI simulation across different tenures, and a stress-test against income scenarios. We help you borrow the right amount at the right rate, not just the maximum you qualify for.