Did you know that prepaying your personal loan lowers the overall EMI? It reduces the interest on the outstanding amount of the loan. The loan will work out cheaper, you will save money, and your credit score will improve!
But what about the foreclosure charges? The trick is to approach the right financial institution and choose the right time to prepay instant loans without extra charges.
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What is the Pre-payment of Personal Loan?
Financial institutions offer their customers the facility to prepay their loans. The borrower can utilize this facility to pay the outstanding instant loan account, including interest amount, before the loan tenure ends. The facility is available to borrowers only after they have paid a few EMIs and may have to pay a certain sum as prepayment charges. The borrowers who intend to prepay their loan must check if their chosen financial company offers the prepayment option with no penalty to avoid the extra charges. Financial institutions also offer their customers two options to prepay their loans. They are:
Personal Loan Part Prepayment
Personal loans have a lock-in period. After the lock-in period, borrowers can pay a part of the instant loan and bring down the EMI.
Personal Loan Foreclosure
A borrower can choose to close the personal loan by repaying the entire loan amount and the interest before its tenure. They could opt for foreclosure after the payment of 6 or 12 EMIs as per the financial institution’s policy.
Prepayment of Instant Loan
In emergencies, it is not always easy to secure a personal loan. When savings and income are insufficient to overcome the difficult financial situation, you can opt for a quick instant loan through the instant loan app. The pre-payment terms of Instant Loan are the same as stated above.
Prepayment of Instant Loan without Extra Charges
Borrowers can prepay an instant loan without extra charges, provided they apply for the instant loan at a financial institution that offers the free pre-payment of instant loan facility to its customers. Here is a list of financial institutions that offer the Pre-payment of Instant loans without an extra charge facility:
Institutions that offer the Free Prepayment of a Personal Loan
You can avail of the free pre-payment of a Personal loan at a lot of major non-banking financial institutions (NBFCs) in the country. It is, however, important that you undergo free prepayment through the exact procedure that the institution specifies.
How is Prepayment or Foreclosure of Personal Loan without Extra Charge Beneficial?
The prepayment or foreclosure of a personal loan is beneficial as the borrower can save on the interest payable on the outstanding instant loan amount. But the profit is in prepaying or foreclosing free of charge.Therefore, if the lender offers the pre-closure or foreclosure facility at an extra charge, the borrower must choose the more profitable option.
Personal loans are expensive as the interest payable is around 25 percent. That makes prepayment or foreclosure the best option to save money. Borrowers must remember this point and check the prepayment or foreclosure policy of the financial institutions before applying for the instant loan.