Loan prepayment tips: While giving a loan from banks, a kind of agreement is made with the customer on many terms and conditions. These rules also include the rule of repaying the loan before the time. Many people manage to arrange their finances in the middle of the loan tenure and think of repaying the loan (loan charges) before the time.

There are some advantages and some disadvantages of repaying the loan before the time. Therefore, the loan holders need to know about how the option of loan pre-payment (loan prepayment rules) affects the financial condition of the customer. Let us know about this in the news.

Charge will be levied for repaying the loan before the time -

Loan foreclosure charges are taken only when someone repays the loan before the time. Pre-closure charges can be from 1 to 5 percent of the outstanding loan amount. NBFCs also charge this fee. Of course, there may be some charges in loan prepayment, but you get rid of the interest on the outstanding EMI. This means that if the outstanding amount of the loan is more, then that loan holder gets more benefit.

Effect of loan prepayment on CIBIL score-

Prepaying the loan improves the CIBIL score, but banks also have their own rules regarding this. Therefore, it depends more on the bank (bank loan news). The best way to improve the credit score is to pay every installment on time during the entire loan period. Loan pre-closure can be beneficial in the sense that you can easily get a loan in the future.

When does the benefit and loss occur-

Choosing the option of loan prepayment (loan prepayment rules) depends on whether you will benefit or suffer a loss. After paying most of the loan amount, there is no special benefit from it. Because you have already paid a large part of the interest in the form of loan EMI. Pre-closure charges are also levied in loan prepayment. Accordingly, you can get some benefit from loan prepayment benefits even before repaying half the loan.

Disclaimer: This content has been sourced and edited from Hr Breaking. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.