How Much Part Payment Should You Make On Your Personal Loan?
What is part payment in personal loan? Get the complete details on part payment of personal loans & the ways to calculate it. Visit to know!
Part payments can effectively reduce the outstanding personal loan amount and, ultimately, the total interest by shortening the loan tenure. You can calculate the part payment amount through a personal loan part payment calculator to budget your finances accordingly. It is important to note that if you make part payments, there is no change in the principal amount or interest rate charged on your personal loan by banks.
What Is Prepayment?
Prepayment means paying off a loan early. Depending on the terms of your loan, you can make the prepayment in whole or in part. With prepayment, you'll pay less interest in the long run because you've started to pay off your debt sooner.
Part payment is not a prepayment but a partial prepayment of a personal loan amount. In the case of a personal loan, you can make a part payment by paying only the interest amount for the month to reduce your monthly instalments, but it does not change your principal amount at all. You can use a loan calculator to decide your part payment amount depending on your remaining EMIs.
You can make partial prepayments during renewal periods (for example, every year) when you pay off a portion of your home loan and keep paying the remaining sum over the remaining tenure period.
When Should You Prepay Your Loan?
• A surplus in your budget permits you to repay your loan in part or whole without derailing other financial liabilities.
• Most financial institutions allow loan prepayments to occur one year after loan disbursal.
• You wish to reduce your principal amount and decrease the interest amount during your tenure.
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Personal Loan Part Payment Calculator
When deciding the part payment amount, ensure that you are comfortable repaying the remaining monthly instalments even after making a part payment on your personal loan.
Additionally, it is important to assess whether you can invest in mutual funds via SIP, build an emergency fund, save for children's education etc., before deciding the amount to go towards your personal loan EMIs.
Apply For A Personal Loan With IIFL Finance
With IIFL Finance personal loan, be it for a vacation or higher education, or financial emergency, this is where we can help you out with a loan of up to Rs. 5 lakh processed over just minutes.
Learn more about personal loan options, calculate your personal loan EMI with a loan calculator and analyze various prepayment options for these personal loans by visiting the IIFL website. Getting a personal loan has never been this quick or easy. Reach out to us and fulfil all your personal financial needs.
Q1. Is it good to pay a part-payment?
Ans. You can lower your tenure and EMI by making part payments and increasing your savings and emergency fund. Part payments are more efficient than regular monthly instalments if you pay off the loan in a short period.
Q2. Why should you repay personal loans early?
A personal loan is a debt that you should repay as soon as possible. It may be tempting to take the cash from the lender and spend it on something else, but it's better to repay your loan early. Here are some reasons why:
• You can save money by paying off your loan with savings or other funds instead of repaying it over an extended period.
• The less interest you pay on your debt, the more money you have left over at the end of each month for saving or paying off other debts (like credit cards).
• If you have several debts, such as student loans and credit card balances, then making extra payments will help you tackle them faster.
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