Thinking Of Paying Off Your Personal Loan Early?

If you’re thinking of paying off your personal loan early, then you are at the right place! This article will tell you all the process required for early repayment!

19 Jul,2022 11:31 IST 146 views
Thinking Of Paying Off Your Personal Loan Early?

Personal loans have become an effective financial instrument for people looking to raise quick funds. The flexibility of having no restrictions on the end-use of the personal loan amount makes it an ideal way to raise funds for any purpose. However, personal loans create a financial obligation for the borrower to repay the loan within the specified tenure. But, what if you want to repay the loan earlier than the set repayment tenure?

Here is all you need to know about repaying the loan early and how you can use a personal loan early repayment calculator to determine your financial obligations.

Can You Pay Off Personal Loans Early?

Yes, typically, a borrower is allowed to repay the personal loan earlier than the set tenure. However, there may be a fee for paying the personal loan early, which differs from one lender to another. Also known as the prepayment penalty, it is generally charged up to 2% of the outstanding repayment balance if the loan is repaid within the first year. Afterwards, the penalty declines for each subsequent year of the loan.

When To Pay Off A Loan Early?

Paying a loan early is feasible only if you have some extra savings. However, it is always wise to use the extra money for more useful purposes, such as investing. In this way, the amount can multiply over time rather than paying a long-standing financial commitment in one go, especially when there’s a prepayment penalty.

How To Calculate Personal Loan Early Repayment?

As repaying the personal loan affects your financial obligations, it is important to know how much you will have to pay to repay the loan earlier than the tenure. The best way to calculate personal loan early repayment is by using a personal loan early repayment calculator by IIFL to determine the impact of early repayment of the loan:

• Move the sliders of the loan calculator to enter details such as loan amount, tenure, rate of interest and the prepayment amount to wish to pay.

• Once you have input these details, you will see the new details of your financial obligations along with the prepayment penalty details.

Avail Of A Personal Loan With IIFL Finance

IIFL Finance is India’s leading financial services company that provides comprehensive and customised personal loans to fulfill your capital requirement. You can also use the personal loan calculator to determine your repayment obligations. The personal loan offers instant funds up to Rs 5 lakh with a quick disbursal process. You can apply for the loan online or offline by visiting IIFL Finance’s nearest branch and verifying your KYC details.

FAQs

Q.1: Does repaying the personal loan early affect the credit score?
Ans: Yes, paying a personal loan early negatively affects the credit score as your average credit history length is shortened.

Q.2: How to know the prepayment penalty?
Ans: You can use the loan calculator to determine the prepayment penalty or consult the lending company to provide you with the penalty details based on your outstanding loan amount.

Q.3: Can the personal loan be fully repaid before the tenure?
Ans: Yes, you can fully repay the personal loan anytime before the loan tenure.

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