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2 mins Read | 4 Years Ago

The key benefits of pre & partial payment of Personal Loan

What are the key benefits of prepayment and partial payment of Personal Loan

Personal Loans are one of the most in-demand financial products in the country today. They are popular because of their flexibility and accessibility. Personal Loans have the fastest disbursement period and do not require any collateral. To apply for a Personal Loan, one has to be at least 20 years of age, self-employed or salaried and should have a regular source of income. This is the standard criteria however, it may not be the same everywhere. Additionally, to avail a Personal Loan, one has to maintain a good credit score. A credit score of above 700 is ideal for a Personal Loan application to get approved.

How does one check the eligibility for a Personal Loan?

Checking the eligibility for a Personal Loan is relatively simple. You can go online and use any tool available. All eligibility tools require basic details such as name, date of birth, income, city, etc. After entering all the details, the tool generates your eligibility status. If you are eligible, it provides you with an estimated loan amount.

What can a Personal Loan be used for?

Almost every loan category has a defined role and purpose. For example, a Home Loan is availed for purchasing a property and an Auto Loan for buying a vehicle. This is not the case for Personal Loans. These loans can be used for different purposes such as medical treatments, education, consolidating debts, hosting a wedding and even for a vacation. The borrower will never be questioned about the purpose of the loan.

What is the repayment period for a Personal Loan?

The repayment period for a Personal Loan ranges between 12 months to 72 months. Some people use the entire tenure to repay the loan while others prefer the prepayment option. Some even make partial prepayments.

What is the prepayment option for a Personal Loan?

Generally once a loan is availed, it is repaid in the form of Equated Monthly Instalments (EMIs) till the end. However, when people have surplus cash at their disposal, they consider closing the loan by paying off the outstanding principal. 

Depending on the lender’s Terms and Conditions, a nominal prepayment penalty may be charged. The prepayment option for a Personal Loan benefits people by allowing them to save money that would have been spent on the interest. People can reinvest the money saved or use it for personal expenses.

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