Personal Loan: If you are ready to pay personal loan before time, then first know 4 important things...

Most people take personal loans when they need money immediately. In the last few years, the number of people taking personal loans has increased rapidly. If you have also taken a personal loan and after arranging the money, you are now preparing to repay it on time, then it is important to know some things. If you know these things then you will be benefited. So let us know what things should be kept in mind while repaying the personal loan before time.

Review the loan agreement: When you take a personal loan, there is an agreement between you and the bank. It contains a clause for premature payment. That includes the early prepayment penalty and the period during which it applies (for example, the prepayment penalty may only apply within the initial year of the loan). By understanding the loan agreement now, you can avoid paying penalties.

Know the penalty amount: The prepayment penalty amount for a personal loan varies depending on the bank and loan terms. Typically, it is a percentage of the remaining loan balance at the time of prepayment. Generally, this ranges from 1% to 5% of the outstanding amount, but in some cases, it may be a flat fee.

You get these benefits: Prepaying the personal loan strengthens your financial position. You have savings growing that enable you to allocate money toward other goals, such as saving for a down payment or contributing to retirement.

It is important to choose the right time: If you have paid a large part of the personal loan, then prepayment will not be of much benefit. This is because you have paid a lot of interest along with the loan EMI. In such a situation, you can get the benefit of pre-payment only as long as you pay less than half the EMI.

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