Personal Loan, one of the most influential financial products that have served the needs of many and always prevailed in demand. It’s easy accessibility and flexibility makes it a first choice of the people in their difficult times. Being collateral-free and quick disbursals are other significant factors that enable people to go for it.
Personal loans with certain terms and conditions are also referred to as instant loans and anybody who is equal or above the age of 21 years can apply for it. One has to show the regular source of income being self-employed or salaried. Apart from that, one of the important determinants is the credit score of the applicant that needs to be good enough to avail the same or to get the loan application approved. A credit score tells the credit history and credibility of the loan applicant, anything above 700 points is considered as ideal. These are a standard requirement that every bank or non-banking financial institute has kept for loan approval.
Loan tenure or the repayment period of instant loan is the period used to pay the loan amount including interest. It generally ranges from 12 months to 60 months, depending upon the borrower eligibility or the time-period chosen by him/her. Generally, many repay the loan amount as per the first selected tenure, but many prefer partial prepayments and prepayment to clear the loan before time.
Many times Prepayment and Partial payment are a good option to go for as it helps to clear the debts on time and also improves the credit score of the borrower.
Let’s get some details and associated benefits of both payment options.
In simple words, pre-payment means paying before the term ends. In a personal loan, monthly EMIs (Equated Monthly Instalments) are scheduled once the loan is approved and disbursed. Every month as per the selected date and amount, EMI will be deducted from the account or paid.
But if one gets the surplus cash from some source they consider clearing the loan by paying off the outstanding loan amount under the pre-payment option.
Prepayment depends upon the terms & conditions of the lender such as pre-payment charges or fees, but it is very minimal as compared to the interest that will be paid. It helps the people to clear off the debt as well as save a good amount of money that they might need to pay under interest rate. The saved money can be used for personal expenses or some investment.
Partial payment means paying some amount of the outstanding loan amount. In partial payment, the borrower chooses to pay the partial principal amount. Paying partly reduces the principal personal loan, which subsequently lowers the interest amount or rate. Even if one pays a small amount, it will significantly reduce EMI and interest and indirectly offers the chance to save money.
Both options are good and offer the borrower to not only save money but also to improve his/her credibility or credit history.
Today, knowing the terms & conditions associated with pre-payment and partial payment on the personal loan is not difficult. Many online platforms like YeloNow bring all leading banks or non-banking financial institutions online at one single place, where the applicant can check and choose the relevant one.
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