Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs SUPPORT
Loans For You
Loans for Business
Investment
Insurance
Apply

Quick Links for loans

Quick Links for Insurance

Investment

Offers Quick Pay
Back

Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure
Know More
Back

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required
Know More
Back

New Commercial Vehicle Financing

  • First time user
  • Retail and strategic Clients
Know More
Back

Used Commercial Vehicle finance

  • Repurchase
  • Refinance
  • Top up
  • Balance Transfer
Know More
Menu  
 
Apply Now

Tata Capital > Blog > Things you Need to Know About Personal Loan Prepayment Option

Personal Use Loan

Things you Need to Know About Personal Loan Prepayment Option

Things you Need to Know About Personal Loan Prepayment Option

Personal loans are a convenient way to fund short- and mid-term goals. Personal loans aren’t just for those who may not be able to afford to buy something; even people who may not want to spend a considerable amount immediately, despite having money available, choose to apply for such loans.

Like all loans, personal loans also come with financial implications. At the same time, such loans also carry multiple benefits, especially if you plan to prepay them. Most financial institutions have a minimum lock-in period, which is usually set at one year (but can be more, depending on the provider). However, once the lock-in period is over, you can choose to prepay the loan. This way, you can complete the monthly EMIs earlier than expected and enjoy additional advantages. If you’re looking to prepay your personal loan, here are some things you need to keep in mind:

Lesser interest

When you apply for a personal loan, the longer repayment tenure sounds like a wise choice since it reduces the monthly EMI. However, in the longer run, this quickly adds up to a pretty substantial interest amount. If you prepay or part-pay ahead of the end date, you can save a decent amount of money you might otherwise pay as interest.

Prepayment charges

A caveat to saving up on interest by prepayment of personal loans is that you have to bear the prepayment charges. Usually, these vary from one financial institution to another and are generally fixed at around 3 – 5%, depending on your provider. However, when pitted against the added interest during the tenure of the loan, the prepayment charges are still nominal. You can also calculate your loan prepayment amount with the help of a personal loan prepayment calculator online.

Opportunity to go debt-free faster

One of the most important reasons for prepaying your personal loan is that you can avoid the debt burden that exists. A lot of people might have multiple loans to repay. Right from a car loan to home or personal loans, there could be several to take care of. Hence, repaying one such loan reduces the debt burden significantly and allows you to channel more outflow towards the other loans, thereby reaching a debt-free stage earlier than expected.

Improve credit score

Your credit score becomes very important when it comes to your financial standing. It’s often taken diligently into consideration by loan providers when you’re applying for loans, and for other financial decisions. A big benefit of prepaying personal loans is that it gives you the chance to go debt-free, which in turn improves your credit score. If you’re unable to settle the entire personal loan amount at one go, even partial pre-payment affects your credit score positively.

If you’re planning to take a personal loan, you can opt for a longer tenure to reduce the immediate interest burden during the lock-in period. However, do keep in mind that you should plan to prepay the loan amount to enjoy the benefits mentioned above. Consider taking a personal loan from Tata Capital to avail of attractive personal loan interest rates and easy prepayment options.

Apply Now

Get an Instant Personal Loan for all your needs !

Apply now
Popular Searches
loan without cibil personal loan for 15000 salary Loan for ring small cash loan on aadhar card pre approved personal loan What To Buy On Dhanteras Personal loan when self employed how to increase cibil score form 15g for pf withdrawal how to download aadhar card
Disclaimer

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Personal Loan EMI Calculator
Home Loan EMI Calculator

Home Loan EMI Calculator
Business Loan EMI Calculator

Business Loan EMI Calculator
Used Car Loan EMI Calculator

Used Car Loan EMI Calculator
Two Wheeler Loan EMI Calculator

Two Wheeler Loan EMI Calculator
Loan Against Securities Calculator

Loan Against Securities Calculator
Loan Against Property Calculator

Loan Against Property Calculator
More Tools
Our Subsidiaries
Our Other Websites

Useful Links and Resources

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Policies, Codes & Other Documents

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Tata Capital Solutions & Services

Uh oh, something went wrong

Please try again later.