Personal Loans have become a popular and convenient mode of financing. In emergencies, Personal Loans are a lifesaver. It requires minimal documentation, and the Loan is processed quickly. If you can manage your finances and strategies and plan to make monthly EMI payments, then it is highly advantageous. You can also make plans for Loan prepayments. Let us understand the benefits of prepaying Personal Loans.

What is prepayment of Personal Loans?

Prepaying a Personal Loan means paying off the Loan before the repayment tenure ends. This is advantageous because it prevents you from paying hefty interest rates that add up throughout the repayment tenure.

Use the Personal Loan prepayment calculator

Using the Personal Loan prepayment calculator is a smart way to calculate the total amount you need to pay before the Loan tenure comes to an end. The Personal Loan prepayment calculator functions like the EMI calculator. You need to consider the following factors to calculate the prepayment amount:

• The total Loan amount that you borrow as the principal amount.
• Loan tenure is another important factor. The tenure is generally stated in months.
• Every financial institution charges an interest rate on Personal Loans.
• Calculating the total number of EMIs you have paid to date is also important. You need to start calculating for the EMIs you have not yet paid using an EMI Loan calculator for Personal Loan.
• Decide upon the month in which you wish to make the entire payment for the Loan.
• Also, inquire about any additional fees levied on you at the time of prepayment of the Loan. To know the exact amount, it is essential to add this amount during the calculation.

Benefits of prepaying Personal Loan amount

Become debt free

The primary benefit of prepaying a Personal Loan amount is quickly becoming debt-free. Our future is unpredictable. Even though you might have applied for the Loan with proper planning and strategies to make timely repayments, you cannot predict future emergencies. It can become challenging to manage Personal Loan EMI payments during such situations. Hence, if you have the means to repay the Loan amount, you should do so to achieve a stress-free life.

Increase credit scores

You should never let go of a chance to improve your credit scores. Paying off a Loan amount before your tenure ends can positively impact your credit scores. A high credit score improves your PL Loan eligibility and increases your application chances.

Save on interest rates

You can save a lot of money on interest payments. If you do not need to pay monthly EMIs, you can use the money spent on interest payments for other purposes, like investments. This improves your financial stability.

Conclusion

Prepaying a Personal Loan can be a smart move. It has multiple benefits and can help you become financially independent sooner than expected.