When it comes to financial assistance in the country, personal loans are the most in-demand. Due to their popularity and accessibility, personal loans are highly preferable. For best offers, you can choose Fullerton India personal loan to apply.
There are plenty of things that you need to consider before applying for a personal loan. You need to learn about your eligibility, premium amount, and the benefits you can avail yourself of from it. To apply for a loan, you must be at least 21 years old and have a regular flow of income. Different banks have varied eligibility criteria for personal loans.
What Do You Need to Know About Loan Repayment?
Taking a personal loan is not challenging. Today you can apply for personal loans through an online website. The difficulty starts when you have to repay it. Yes, you need to pay interest on your loan, monthly or quarterly. It is important to understand there are different categories for repaying the loan. You can either pay the outstanding amount in full or make a partial payment. Hence, you can prepay or part-pay your amount.
Let’s take a look at the benefits of both options:
Benefits of Loan Prepayment
A majority of Indian banks may allow you to prepay the entire outstanding amount after one year of the loan sanction. You can save a lot on your interest by paying the full loan amount.
Let’s take an example:
Suppose you took a loan of ₹3 lakhs at 15% p.a interest for 5 years. The processing fee is 2%, and after the calculation, your monthly EMI will be around ₹7,137. So, by the end of the year, you have to pay ₹35,529 as interest. However, if you decide to prepay the entire amount of ₹2,64,160, you can save ₹57,049.
Some banks may charge a penalty fee for closing the loan. The fee will be charged against the outstanding amount that ranged from 2% to 5%. With the personal loan calculator, you calculate how much the loan is costing you.
Benefits of Loan Part-Payment
If you have chosen a long-term of your loan, it may be challenging for you to pay the amount. Loan tenures can increase the interest, whereas shorter tenures will lower the interest rate. When you choose to make part-payment, you can either maintain the same tenure or reduce the EMIs. It is important to understand that part payments only work when you make a lump sum payment.
Additionally, if there are any prepayment charges, there will be a lesser effect on your EMIs. It is important to check whether your bank is providing you part payments. Also, read the foreclosure rules and regulations before you take that option.
How Can You Apply For Loan Foreclosure?
The steps to apply for loan foreclosure are quite simple:
Contact the bank where you need to apply for the loan and understand the requirements.
You will have to visit the bank with all the necessary documents.
Discuss with the relationship manager regarding the foreclosure
The loan officer will then calculate your outstanding amount with the penalty fee that you need to pay.
The financial institution will then process the request once they receive your outstanding payment.
What Will Be The Effect of Such Payment On Credit Score?
The part payment done on your loan will have no effect on the credit score. However, it will help in reducing the debt and cleaning the loan at the right time. On the other hand, full payments can impact your credit score in the long run because you have completed the loan before the time assigned.
The Bottom Line
Personal loans are ideal financial assistance that people of all classes prefer. There are different loan repayment options that you can select according to your preference. Both full repayment and part-payment have their pros and cons. It depends on you to choose an alternative that can best provide you the benefits.
