Understanding Loan Prepayment
Loan prepayment allows you to pay off a portion or the full outstanding loan before the scheduled tenure ends. This calculator helps you understand potential interest savings and reduced loan tenure.
Types of Prepayment:
- Part Prepayment: Paying extra towards principal without closing the loan, reducing interest and potentially shortening tenure.
- Full Prepayment / Foreclosure: Paying the entire remaining loan amount to close the loan account early.
Benefits of Prepayment:
- Interest savings over the remaining tenure.
- Reduced loan tenure and faster debt clearance.
- Improved financial flexibility and peace of mind.
- Potentially better credit score.
Considerations & Disadvantages:
- Prepayment charges may apply, especially for fixed-rate loans.
- Opportunity cost of funds used for prepayment instead of investment.
- Potential loss of tax benefits on loans like home loans.
- Ensure liquidity before making large prepayments.
Use this calculator to make informed decisions about prepaying your Home Loan, Personal Loan, or Car Loan, balancing savings and financial goals effectively.