Is Loan Prepayment the best thing for you?
Part-prepayment might sound like the perfect way to leave a painful EMI scheme behind, but before you think about making a prepayment on your loan amount, there are some things that you should know.
Mentioned below is everything that you need to know about prepayment and the common problems with loan prepayment.
Loan Prepayment Charges
Interest on a loan makes up a large part of your early EMIs. So if you make a prepayment, the lender is deprived of the interest amount. That’s why some lenders charge a loan prepayment penalty, which is sometimes about the same as the accumulated interest amount. Other than the penalty, some lenders also extract a surcharge on the principal amount. So at the end of the day, you’ll end up paying equal or sometimes even more than the loan amount that you owed the lender in the first place.
For instance, when you’re planning to buy a property, you should look out for home loans with a lower interest rate so you don’t have your monthly finances drained. Now if you think that you’ll be able to prepay your loan well before the due period, a home loan with no prepayment charges such as the one offered by Bajaj Finserv might just be the one for you.
Bajaj Finserv also allows prepayment up to 6 times a year, putting an end to all your home loan repayment problems. But remember, the minimum prepayment amount has to be equivalent to three times your monthly EMIs.
One of the most important steps towards ridding yourself of all the loan repayment problems is to obtain an NOC certificate. This is a clearance certificate by the lender stating that you’ve paid the due amount. Also, during the course of the loan payment, make sure to keep track of your monthly EMIs and statements.
Bajaj Finserv offers customers the comfort of calculating and keeping a track of their EMIs by using a handy EMI calculator.
Now if you’re looking for another way to reduce your loan amount without making a prepayment, you can make small additional payments along with your monthly EMIs. A more convenient way to do that is by increasing your EMI if you feel your finances have stabilized. Bajaj Finserv allows its customers to increase their EMIs at any time during the course of the loan and shorten the loan tenure period.