How Personal Loan Prepayment Could Benefit You
Repaying a personal loan well within the timeline is a great way to reduce your debt. People often debate whether they should prepay a loan or, at the same time, wait till the completion of the tenure. If you follow our advice, we will always suggest that personal loan foreclosure is the best decision, as it will automatically help you in the long run.
However, at the same time, it is also important to understand how to prepay personal loan, why it is a good option for you, and how it can help you in the longer run. Prepayment of a personal loan is ideally the best-case scenario, and we strongly suggest to all our clients to come on board with us at Ruloans and ensure they can get amazing services and a great borrowing experience with us.
What Is Prepayment of A Personal Loan, and How Does It Benefit You?
A personal loan is money you take from various sources to satisfy your personal needs. However, at the same time, the payment date is set up, and usually, there is an EMI-based scheme for a particular period of years, and that too in a time stretch. However, sometimes people do have the capability of paying their loans even before that date, and we also suggest the same. But why so?
- Save Interest Cost:
The first and most important reason we ask you to prepay a personal loan is that you tend to save on many interest costs. Any of you who has taken a personal loan or knows a little about the same would know that there is usually an interest rate levied on the same, and you have to continue paying that unless your entire loan amount has been settled.
When you prepay the loan before the tenure date, automatically, you save on that interest amount. Usually, you will notice that this interest cost adds up to quite a sum of money and is good for your pockets!
- Impact On Your CIBIL Score:
Do you know what a CIBIL Score is? It is the score you collect based on your credit records, and there is a minus marking every time you delay or fail to make a payment. But, at the same time, every time you make an early payment, there is a positive score as well, which ensures that you can secure a loan at better interest rates the next time.
We will always suggest that you make sure your CIBIL score is up to the mark, as this has a lot of repercussions on your financial record. Prepayment of personal loans is a great way to avoid any negative scores.
- Eligible for Another Loan:
Most companies or banks will not allow clients to take up a personal loan unless and until that has been payment of the existing personal loan. Hence, it is automatically given that when you prepay your loan, you are eligible to apply for another loan. Not only that, getting hold of this particular personal loan will be much easier, and the interest rate will be a little bit less because prepayment of your previous loan will positively impact your credit records.
Personal Loan Prepayment Charges
We understand that clients also have a lot of curiosity to understand why they should prepay a loan and whether it will impact their financial situation. However, you must know that some banks add a lock-in period of 6 – 12 months, where the borrower needs to pay the said number of EMIs. Some banks allow a part payment of up to 25% of the principal amount that is due in a financial year, and they can do so only twice in the entire loan term. Few banks allow borrowers to foreclose their loans only after they have paid a minimum of 12 EMIs.
Moreover, a few lenders may charge a fee of 2.5% or more + GST if the part-prepayment is more than 25% of the total outstanding sum. However, the fees are determined by considering the loan principal and the lender who issues the loan.
Where Can You Get Guidance Related To Financial Aspects?
Indeed, many of us do not have much idea when it comes to loan-related queries; hence, having experts guiding you is the best thing you can aspire for. If you have similar requirements and want assistance from the best, you can feel free to contact us at Ruloans. We have been in the sector for the past few years, so we know what your loan-related decisions should look like.
Not only as clients but if you are a DSA partner and want to connect with us for business, make sure you get in touch with us.
Summary We have always believed that prepayment of a loan is indeed a very good thing to do, irrespective of what people suggest you do. Not only that, but we will also say that if you can make the prepayment much earlier, it will save you the interest amount.