The popularity of loans, despite the fact that it brings a chunk of interest, has grown over time. It helps in meeting the urgent requirements of cash/money, e.g. to finance weddings, religious ceremonies, buying consumer durables and what not. Apart from these usual benefits, personal loans also offer flexibility in reimbursement type. Besides the standard way of amortization, one can also opt for Prepayment or Partial payment.
Prepayment
Suppose, after paying a certain number of EMIs, you luckily get sufficient idle money, which can be used to repay the remaining principal amount. You can definitely do that by using the Prepayment mode. This will help you in saving the amount of money, which would have been gone as ‘interests’, otherwise. Banks generally provide this option for the reimbursement of personal loans. This is highly advantageous in terms of savings. However, some of the banks may charge 2-3% of the remaining principal in order to proceed with prepayment.
Partial Payment
Now take the other case, suppose you have a lump sum of idle cash, but not enough to pay the entire remaining principal loan amount. There is no need to worry, as you can use the available money to bring down the principal amount, if not the entire loan. This proves to be utilitarian in two ways. First, it chips the remaining principal loan by that amount and subsequently brings down the EMI. Secondly, this also lowers the interest amount. Moreover, this isn’t limited only for once, you can pay sums a number of times, bringing you the same benefits.
Read Also: What is A Loan Repayment
