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6 Tips To Pay Off Personal Loans Early

Want to repay your personal loan faster? Follow these 6 tips to pay off your personal loan early. Visit to know more here!

27 Oct,2022 18:46 IST 224
6 Tips To Pay Off Personal Loans Early

Acquiring debt creates an obligation to repay the principal amount with interest. Therefore, you must have a strategy to determine how you will fund your EMIs and eventually repay the entire amount. It’s best if you have a regular income source that you can use to pay your EMIs and daily expenses smoothly. However, if you have the resources to pay off the personal loan early, you should consider it.

This article explains the benefits of the personal loan early repayment and tips to achieve the same.

Is It Right To Pay Off Personal Loans Early?

You can save on interest and improve your credit score if you can afford a personal loan early repayment. However, you should do so if you have the budget and your chosen lender does not charge an upfront penalty.

It's a good idea to have at least 3-6 months of emergency savings before considering prepaying your loan. If you make the minimum monthly payments, your credit score will maintain its level. However, paying off the loan earlier will improve your daily budget and avoid additional interest.

Tips To Pay Off Personal Loans Early

Paying off a personal loan earlier has its pros and cons. While you get to save money on interest and reduce your debt burden, you may have to pay a prepayment penalty. It can also affect your credit score. However, consider these tips if you decide to close a personal loan early after the cost-benefit analysis.

1. Analyse Your Debt Obligations

Start reviewing all your debt, from credit card balances and mortgages to unpaid medical bills. Write down the amount owed, the applicable interest rate, and the minimum payment requirement for each item. Knowing what you owe can help you choose the right debt consolidation strategy based on your situation.

2. Split Up Your EMIs

Splitting a monthly payment into two biweekly payments is the easiest way of speeding up the payment process. For example: If your EMI per month is INR 500, you can pay INR 250 each month in two instalments and add another INR 100 to your principal balance. This allows you to pay off your loan faster while enjoying the credit benefits of regular payments.
Zaroorat aapki. Personal Loan Humara
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3. Boost Your EMIs

Even if you don't have enough extra income to make a large monthly payment, you can still make extra payments from time to time to reduce your debt. Consider using additional income from bonuses and reducing unnecessary spending. The trick is to change your habits and set aside a budget for further loan payments.

4. Refinancing

Debt refinancing allows you to convert your existing debt into new loans with lower interest rates or a different repayment schedule. Refinancing your loan will reduce your monthly payments and help you get out of debt faster.

5. Pick The Right Account For Your EMIs

Withdrawing money from your broker or savings account to pay off your debts is not your best bet. This way, you may not offset the interest you earn on your savings against the interest you pay on your loan. Deposit monthly payments into your checking account for easy access to your funds.

Avail Of A Personal Loan With IIFL Finance

IIFL Finance is one of the leading personal loan providers. Get competitive interest rates and instant loan approvals. The personal loan approval process is 100% online, and you can repay the loan from anywhere at any time.

Check our website or visit the nearest branch today.

Frequently Asked Questions

Q.1: What is a prepayment penalty?
Ans: A prepayment penalty is a fee some lenders charge if you prepay all or part of a loan. All lenders don’t charge prepayment penalties.

Q.2: How to calculate personal loan early repayment?
Ans: You can determine the personal loan early repayment amount using IIFL Finance calculator to determine the prepayment consequences.

Zaroorat aapki. Personal Loan Humara
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Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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