Is EMI a Good Option for a Young Working Professional?

Oct 12, 2020
 |  1 min read

We all dream of having a house of our own, a car that matches our status, the latest phone in the market, or if nothing else, we all want to take that dream holiday. But not everyone runs a successful business or has access to fluid money especially, if we talk about young working professionals straight out of college.

So, what is the next best solution to it? Personal loans for salaried employees! Perhaps, to borrow the required amount from a financial institution like a bank, fulfill our dreams, and then pay the amount with interest in the form of an EMI. The simplest answer to your question – what is EMI (equated monthly installment) or EMI meaning – it is a fixed amount of payment made by a borrower to a lender on the same day of each calendar month. EMIs cover both interest and principal each month so that over a specified number of months or years, the loan is fully paid.

Shopping Using EMIs

Once we know what EMI is, things become clearer to secure one. Life changes as we start earning. While we were happy with a limited wardrobe and simple things as students, we now want to aim higher and acquire gadgets and things that we always dreamt of. And why not! With the availability and easiness of getting an instant personal loan for salaried people, the next best thing to do is to plan your EMIs and do some EMI shopping.

However, before you take the plunge, it is imperative that you learn how EMI works, to be able to make a wise decision and opt for a loan that suits your requirement and pocket. After all, it is you who have to bear the monthly repayments after fulfilling your goal.

Benefits of Taking an EMI

EMI based loans are versatile. From a car loan or EMI for a bike to a house loan, and from a student loan to a personal loan for salaried employees that can be used for many purposes, the market is today flooded with a plethora of options to choose from. However, before we dwell any further, let us consider the benefits of opting for an EMI when you are a young working professional.

1. The Freedom to Buy Expensive Utilities

To begin with, taking a personal loan for salaried employees with an EMI option gives us the freedom to buy expensive utilities that we might not consider otherwise. Be it a vehicle, expensive household items, gifts for family and friends, jewellery for wedding, or a house itself, EMI shopping helps buy anything and everything in one go. As you get a chance to divide the used amount in monthly instalments and pay it back easily, they make the buying process easy. Furthermore, EMI shopping is not only beneficial for the buyer, but also for the seller as they get to widen their customer base.

2. Easy Documentation

As more and more working professionals and even students who have a part-time job are opting for various loans, banks and financial institutions have reduced the paperwork and the processing time required for loans—especially with regard to personal loans for salaried customers, making it easier to get the needed fund without waiting for it for too long. This means you will not have to miss out on a good deal because of financial constraints. This has made loans attractive to consumers who have nothing of value to use as collateral.

3. Pocket-Friendly Repayment

The repayment terms are generally flexible and allow you to pick a tenure that will optimize your monthly outgo according to your needs.

4. Choose an Amount that You Need

Loans give you the option to pick an amount that best suits your needs and monthly repayment budget. However, it is also dependent on your credit score.

5. Range of Repayment Terms

Gone are those days when loans had strict rules around repayments. With multiple repayment options and higher flexibility, especially since the advent of money lending apps in India, it now depends on how quickly you want to repay the amount.

Things to Know Before Opting for an EMI

Whether you consider an EMI for a bike, a house, for an international holiday, or to buy the latest gaming console, there are certain things that you must know about and should consider before opting for EMI shopping.

1. Range of Repayment Terms

Knowing how you want to spend the borrowed money is the most critical factor to consider before taking a loan. Borrowing money is a big financial step and can make or break the deal depending on how you manage it.

2. How Much You Can Afford to Borrow

The next step is to consider how much money you can afford to borrow in terms of repayment. This is an important question as this will help you plan your EMIs. Aim at affordability since it is a large contributing factor even before applying. After all, it is not just about being able to afford the fixed monthly EMIs but also adjust them comfortably within your cost of living while maintaining a steady income outflow to meet any unforeseen emergency.

3. Research on Loan Options

With the easy accessibility of information on the internet, do extensive research on the available market options before signing any paper. From how EMI works to factors that formulate a loan to the down payment (if any), EMIs, repayment tenure, etc., research on these factors before your loan application to choose a suitable loan from a better lender at attractive interest rates.

4. Longer Tenure Means a Costlier Loan

Read the monetary policy carefully to understand how the interest rate and interest amount change based on the tenure you choose. What might look like a relief today could result in you paying a huge amount just for the interest.

5. Spend Cautiously

No matter how well your income is today and how small of a loan amount you borrow, spend cautiously to ensure your monthly expenditure and savings are all in place.

6. Maintaining the CIBIL Score

Maintaining a stable and good credit score helps in the future when you want to apply for another loan. Regularity in EMIs pays off well and helps with the quick processing of an instant loan for salaried employees and disbursal the next time.

7. Additional Charges

Consider all other administrative, processing, and service charges that banks levy upon borrowers and plan your monthly finances accordingly.

How to Plan Your EMIs Smartly?

1. Choose the Right Loan Tenure

Calculate your savings and the exact amount you need before applying for a loan to ensure you have to bear lower EMIs, which would enable you to repay the loan comfortably. While choosing the tenure, consider your age, income, repayment capacity, future plans, etc.

2. Increase your EMI amount over time

Since, as a salaried employee, you will get an annual hike, consider increasing the EMI amount simultaneously to reduce your loan tenure and the total outstanding loan amount.

3. Prepay Whenever You can

Prepaying your loan whenever possible helps lower your outstanding loan amount, reduce the total interest payout, and thus decrease your loan tenure as well. For this, it is advisable to keep the prepayment/foreclosure terms in mind to ensure you get to plan your finances without hassle.

4. Go for a Lower Interest Rate

With plenty of lenders available in the market, you can opt to transfer the remaining loan amount to another lender offering a lower interest rate to save money in the long run. You can also opt for services like mPokket, one of the best apps for an instant loan that helps you borrow instant loans and offer low-interest rates with easy repayment options that allow you to meet your requirement without any hassle.

5. Grow Your Savings

While personal loan for salaried employees gives financial liberty, however, no matter how little the loan amount is, focus on your savings and invest them appropriately to earn interest and returns. This can also be used to repay the loan amount later and thus save on the EMIs.

6. Never Delay or Miss Your EMI Payments

Financial discipline can help you maintain your CIBIL score. An outstanding payment can cause a problem for new credit cards and another personal loan for salaried persons.


Getting a personal loan for salaried employees that are otherwise difficult to save is a good option to fulfill your dreams; however, it is advisable to consider all factors before applying for a loan. Having a basic understanding of what EMI is to even how EMI with a debit card works can help anyone understand the nitty-gritty of how EMI works can help in making a sound decision.

Gaurav Jalan

Gaurav Jalan is the Founder and CEO of mPokket, a digital lending platform serving underserved Indian youth. He leverages technology and experience to deliver cost-effective credit to marginalized populations. In his role, he provides strategic direction and oversees execution to fulfill mPokket's mission.