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Why Opt for Prepayment and Partial Payments in Personal Loans?
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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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Taking a Personal Loan can sometimes feel like navigating a long, winding road. The end goal? To be debt-free! But one aspect that often puzzles borrowers is the decision around prepayment and partial payments. This blog will discuss these options at length to help you decide if they are right for you.
Understanding Prepayment in Personal Loans
Let's say you've taken a Personal Loan for a sudden home renovation or an unexpected travel plan at high Personal Loan interest rates. Fast forward a few months, and you find yourself in a comfortable financial position, maybe due to a bonus or an increment. Here's where prepayment comes into play. Prepayment means paying off your loan in full before the tenure ends.
Partial Payment: What is Part Payment in Loan?
Let's say you have a Personal Loan but can't pay it off in full just yet. Here's where a Personal Loan part payment or partial payment steps in. It's like a middle ground where you make a significant payment towards your loan balance, but not in its entirety.
Can We Pay Personal Loan in Advance?
Absolutely, paying your Personal Loan in advance is considered a financially smart move.
How to Pay Extra EMI for a Personal Loan?
Paying an extra EMI isn't as complex as it may sound. Here's a simple breakdown of how you can make the payment in a few simple steps:
Leveraging Tools and Calculators
Empower yourself with tools like the Personal Loan EMI Calculator. It helps you see the tangible impact of prepayments on your loan tenure and interest expense.
Understanding the Fees and Charges
Be mindful of Personal Loan fees and charges that might apply for prepayment or part payment. Sometimes, the charges might outweigh the benefits, so do your math right.
Documentation: Keeping It in Check
Ensure your Personal Loan documents reflect the required changes – the updated loan amount after your partial payment or prepayment.
Eligibility Criteria
Stay updated about your Personal Loan eligibility, especially if you plan to take another loan soon. Depending on the case, prepayments and partial payments can impact your eligibility.
Conclusion
Opting for prepayment or partial payments in Personal Loans is like finding a hidden shortcut in a maze. It not only saves you money but also brings peace of mind. It's about being proactive with your finances and making informed decisions that align with your financial health. So, the next time you consider taking a Personal Loan, keep these points in mind and proceed confidently.
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