Every time you try to find out some information about Personal Loans, you are simply bombarded with so much of know- how and so called suggestions, that you really don’t feel like sifting through all of it. So, let’s take it one step at a time and try to understand with clarity the various aspects related to Personal Loans.
Today, we specifically deal with the case of part payment and pre-closure of your personal loan.
While personal loans are mostly availed for their quick disbursal, the interest rates that come along with it are something that’s not welcome by borrowers. No reason to worry though, several banks have facilitated the consumer in such a way that their loan can be repaid earlier than the said tenure, or repay part of the loan amount at a convenient time.
The former option is called – Pre-Closure.
- Being able to pay back the entire amount of your personal loan before the actual tenure ends, will certainly help you save up a whole lot. You will be paying back the principal amount primarily, and the money you pay for the interest rate automatically reduces.
- Of course, it is a question of when you can pre-close the loan. Every bank has its own specifications when it comes to paying off the loan early. A few banks ask you to pay a certain number of EMIs (say 3 or 6 or sometimes 12 EMIs) before you can actually pre-close the loan.
- Also, there are separate pre-closure charges that may be applicable depending on when you choose to pay off the loan. The charges vary anywhere between 2% to 5% of the outstanding loan amount at that point of time.
- However, there are several limited period offers which you can avail, where in the pre closure charge is mostly nil.
The next option is – Part Payment
- If you don’t wish to pay off your loan in one shot, but still want to pay it off early, you may choose to pay part of the outstanding loan value at a time you feel comfortable to do so.
- For instance, you can choose to pay anywhere between 2 to 5 times of your EMI value at least once a year. Some banks allow the same, more than once a year.
- Some banks don’t have the option of part-payment at all. So, make sure you have the choice of availing this facility; because this will definitely help you reduce your interest payable and help you save up on those EMIs. Eventually, you will end up paying off your loan ahead of the suggested tenure which sure is a good thing for your wallet.
- The Part-payment charges are very minimal or nil in the banks where this facility is available.
A personal loan is perhaps the fastest way to fulfil your immediate requirements for money. However, it is also equally important that you repay it as soon as possible, for saving money as well as ensuring a positive credit history.