My Loan Care India

What is prepayment?
When a borrower pays off his/her loan entirely or in part before the defined due date, it is termed as prepayment.

When considering prepayment, borrowers need to ensure that they factor in the following aspects:

Actual savings
Loan owners often presume that because they have already paid a substantial number of EMIs, the interest component is much lower, and it hence makes little sense for them to prepay the loan amount. The truth, however, is that the borrower pays the same interest for the unpaid principal amount, since the interest is calculated using the reducing balance method. When considering prepayment, borrowers should hence consider the prevailing interest rate, rather than the loan tenure.

Whether or not to prepay your loan depends on many factors such as the stage of loan payment you are at, the interest rate, and the prepayment charges. An analysis of these elements is a must before you decide to take action.

Know more about it here: https://www.myloancare.in/personal-loan/prepayment/