HomeLearning CenterWhen Is the Right Time to Create a Single EMI? – Full Guide
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LoansJagat Team

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03 Jun 2025

When Is the Right Time to Create a Single EMI? – Full Guide

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Jaya sipped her chai at her favourite tapri, scrolling through her phone. "Arey yaar, fir se EMI reminders!" She shook her head in frustration. She paid ₹12,000 for her home loan, ₹8,000 for her car loan, and ₹5,000 for her personal loan—₹25,000 in total, but on different dates. "Matlab pura mahina bas due dates yaad rakhne me nikal jata hai!"

 


Her friend Vikram realised that she was very worried and leaned forward. "Arey Jaya, what's with all the tension? Just take one single EMI, na!"

 


Jaya looked up, puzzled. She asked, "How?"

 


"Simple hai!" Vikram said. "Right now you have various loans on which the interest rates are 12%, 14%, and 15%. Now if these can be consolidated into one loan at an interest of, say, 10%, even, it can reduce your total EMI to ₹22,000 from ₹25,000. That’s a direct saving of ₹3,000!"

 


Jaya’s eyes widened with realisation. "Wah bhai! Ek teer se do nishane—EMI bhi simple, bachat bhi pakki!" She decided to check her options. "Paise bachane ka asli jugaad yahi hai!"

 


For the first time in months, her chai tasted extra meethi!

 


What Is a Single EMI? - “Jaldi Karo Varna Late Hojayega!”


It's the one fixed payment a borrower makes to a lender every month as part of an Equated Monthly Installment (EMI) plan. A single EMI helps you customise all your debts in one single affordable EMI as per your income and lets you pay the debt efficiently. A ‘single EMI’ loan is often referred to as a ‘debt consolidation’ loan.

 


Why Do People Choose Single EMIs?: “Jaldi Niptao, Zindagi Ka Mazza Uthao!

 


People use single EMIs to make their money control simpler and reduce their psychological distress. These are the main reasons why you should choose Single EMI as a repayment method.

Simplified Repayments


Dealing with different lending terms becomes hard to handle. Under this option, customers make simplified single monthly payments that reunite all their financial obligations.


Example: Jaya would simplify her payment schedule when she combines all EMIs into one monthly payment.

Lower Interest Rates


If the interest rate on a consolidated loan is lower than the combined rates on existing loans, it can result in significant long-term savings.

 


Example: Jaya held bank debts with interest rates of 12%, 14%, and 15%. By merging her loans to a 10% rate, she reduced ₹3,000 of monthly EMI payments from ₹25,000 to ₹22,000.

 


Jaya’s existing EMIs vs. Single EMI

 

Loan Type

Existing Loan Amount 

Old Interest Rate

Old EMI

New Interest Rate (After Consolidation)

New EMI

Home Loan

₹5,00,000

12%

₹12,000

10%

₹10,500

Car Loan

₹3,00,000

14%

₹8,000

10%

₹7,200

Personal Loan

₹2,00,000

15%

₹5,000

10%

₹4,300

Total

₹10,00,000

Varies

₹25,500

10% (Consolidated Loan)

₹22,000

 

Reduced Financial Stress


EMI payments become too difficult to handle when you need to pay several at once. The monthly fixed payment simplifies finances by lowering mental stress.

 


Example: A solitary EMI plan was simpler to handle for Jaya, rather than maintaining three different payments. No more worrying about multiple deductions from her account at different times.


Better Cash Flow Management


A single, steady payment helps you make better budgets and keeps your finances from getting tight at the last minute because of multiple due dates.

 

 

Example: The scheduled EMI date let Jaya arrange her money better so she could set aside funds for savings as well as for everyday expenses.

 

Avoiding Late Payment Fees


Nonpayment of several EMIs can result in penalties and also diminishes your creditworthiness. A single EMI payment provides better chances to avoid payment errors.

 


Example: Due to unpaid loans, Jaya received financial penalties twice, which she recovered afterwards. Having one EMI protected her from paying those unwanted penalties.

 

Improved Credit Score


Making regular loan payments on a single loan improves your credit score so you can access new loans more easily.

 


Example: Regular payment of her single loan kept her credit score optimal and made it simpler to find good financial deals going forward.

 

Higher Loan Eligibility in the Future


Effective handling of one monthly loan installment builds better financial standing, which helps you take out bigger loans at reduced rates later.

 


Example: Stable financial performance makes Jaya more eligible for larger loans that 

come with discounted interest rates.

 


The Risks of Choosing a Single EMI: “Darr Ke Aage Jeet Hai?

 


Jaya realised she needed to weigh certain risks against each other before concluding her decision to use a single EMI plan.

Higher Overall Interests: Although her EMI decreased, her loan duration extension led to increased interest expenses throughout the entire period.


Processing Fees and Hidden Charges: Jaya’s bank applied a 2% processing fee, and she faced extra costs due to prepayment restrictions on her previous loans.


Collateral Risk: She secured her house as collateral security, which exposed her home to property loss if she failed to meet payments.

 

Reduced Financial Flexibility: Her long-term fixed EMI caused constraints in her ability to handle unexpected expenses.

 

Temporary Credit Score Dip: Loan consolidation requires a hard credit inquiry, which affects the credit score briefly. The credit score of Jaya dipped momentarily when she underwent the mandatory credit evaluation procedure.

 

Not Always Cost-Effective: She discovered that despite her reduced interest payment, she needed to consider additional charges to accurately calculate money savings.

 

Debt Cycle Risk: The reduced EMI tempted Jaya to take on additional debts that threatened to create a new debt cycle.

 


The Best Time to Opt for a Single EMI: “Aaj Nahi Toh Kab?


Jaya realised she needed to weigh certain risks against each other before concluding her decision to use a single EMI plan.

 

Situation

Why Is It the Right Time?

Jaya’s Case

Managing Multiple EMIs Becomes Difficult

Too many due dates make tracking payments stressful.

Jaya had 3 EMIs on different dates, making it hard to manage.

High Interest Rates On Existing Loans

A lower consolidated loan rate can reduce monthly payments.

Her loans had 12%, 14%, and 15% interest, while a single EMI offered 10%.

Need Better Cash Flow

Lower EMI means more money for savings and expenses.

Consolidation saved her ₹3,000 per month.

Frequent Late Payment Penalties

One fixed EMI reduces the risk of late fees and damages the credit score.

She had missed payments before, affecting her finances.

Planning A Big Financial Goal

Helps in managing funds for major expenses like a house or business.

She wanted better financial stability for her plans.

Stable Income

Ensures smooth repayments without financial strain.

Her steady marketing job made consolidation a safe choice.

 


The Credit Score Factor: “700 Ke Upar Chahiye Bhai!


The monthly EMI payment affects your credit score through various evaluation parameters. Here’s how:

 

Factor

Impact On Credit Score

Numerical Effect

Hard Credit Inquiry

Applying for a single EMI loan triggers a credit check.

Score may drop by 5-10 points.

Loan Closure and Credit Age

Closing old loans can reduce the average credit history.

Possible drop by 5-15 points.

Timely EMI Payments

Regular payments improve credit history.

Score can increase by 50-100 points in a year.

Missed EMI Payments

Late payments negatively impact the score.

The score may drop by 50-80 points.

Credit Utilization Ratio

Consolidating multiple loans reduces the credit usage percentage.

If utilisation drops from 60% - 70% to 30% - 40%, the score improves.

Future Loan Eligibility

Good repayment behaviour leads to better credit opportunities.

After 6-12 months, the chances of getting lower interest rates improve.

 


How Rates Affect Your EMI: “EMI Ki Kahani, Interest Ki Zubaani!”


The interest rate you receive at the bank determines the size of your Equated Monthly Installment (EMI). A higher interest rate produces increased EMI costs, but the opposite effect occurs when interest rates decrease.

Direct Impact on EMI


The amount of additional payment on loan value depends on interest rates.

The cost of paying interest to lenders will be increased when your interest rate is higher.

 

EMI Comparison at Different Interest Rates

 

Loan Amount

Tenure

Interest Rate

Monthly EMI

Total Interest Paid

₹5,00,000

5

8%

₹10,138

₹1,08,304

₹5,00,000

5

10%

₹10,624

₹1,37,469

₹5,00,000

5

12%

₹11,122

₹1,67,339

 

Fixed vs Floating Interest Rates

  • Fixed Interest Rate: Under this, the monthly payments stay equal during all periods of the loan term. This is good for financial stability.

  • Floating Interest Rate: In this, the interest rate changes according to market values. This loan type offers advantages when the market interest rate drops.

 

How to Lower EMI with Better Interest Rates?

  • Homebuyers with strong creditworthiness should use it to bargain for reduced interest rates from lenders.

  • Balance transfer opportunities should be pursued to take advantage of rate reductions found at other financial institutions.

  • Extending loan duration will decrease your monthly EMI payments, though it might enhance the total interest cost.

 


Financial Hacks for Smart EMI Planning: “Yeh Dosti Hum Nahi Todenge!

 

Hack 

Benefit 

Numerical Impact

Choosing the Right Tenure

Shorter tenure = Less interest

₹5 lakh at a 10% interest rate:

5-year EMI: ₹10,624

10-year EMI: ₹6,608

Compare Interest Rates

Lower rates = Lower EMIs

₹5 lakh at a 10% interest rate:

EMI ₹10,624

₹5 lakh at an 8% interest rate:

EMI ₹10,138

(Savings of ₹29,000)

Make Part-Payments

Cuts EMI or tenure

₹10 lakhs at 10% interest for 10 years: EMI ₹13,215

₹1 lakh prepayment: EMI ₹11,894

(or 1.5 years shorter)

Loan Balance Transfer

Shift to a lower rate

₹7 lakh loan at 12%: EMI ₹12,423

Transfer at 9% interest rate: EMI ₹11,261

(Savings of ₹97,000)

Automate EMI Payments

Avoid late fees and score drops

Missed ₹15,000 EMI,

Fee: ₹500 to ₹1,000 + 50-point drop

Increase EMI with Salary Hike

Faster loan closure

2,000 per month cuts loan by 2 to 3 years

Maintain a High Credit Score

Better loan offers

750+ score: 10% loan

650- score: 14% to 16% loan

Avoid Unnecessary Loans

Prevents burden

Home (₹25,000) + Car (₹12,000) + Personal Loan (₹10,000) = ₹47,000 EMI

 


Conclusion


Choosing a single EMI is all about timing and financial strategy. If you're juggling multiple EMIs with different due dates and high interest rates, consolidating them can simplify payments and reduce costs. The best time to opt for a single EMI is when interest rates are favourable, your credit score is strong, and you have a stable income to support repayment. While it offers savings and convenience, be mindful of processing fees and tenure extensions. Smart planning ensures that a single EMI isn’t just an option but a financial upgrade!

 


FAQs

  • What steps do lenders take when you fail to pay only one scheduled EMI?

Failing to make payments brings sequential charges of late fees alongside penalty interest and decreased credit score.


  • Should I choose full payment or opt for a one-time EMI option?

Available funds should be used to pay loans in full because this practice eliminates ongoing interest expenses. The use of a single EMI can serve to maintain your financial cash flow management needs.

  • A single payment toward an EMI payment will create what impact on my credit score?

On-time payments will improve your credit score, yet delayed or non-payments cause credit score damage.

  • Among all loans, what are the best options for payments made as a single EMI?

Single EMIs become a common feature in personal loans as well as credit card purchases alongside retail financing because they offer flexibility and reduced costs.

 

 

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LoansJagat Team

We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?

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