Early Personal Loan Repayment: Pros, Cons, and Hidden Costs Explained

Thinking of repaying your personal loan early? Here's how it really plays out.

When you take a personal loan, you typically commit to a fixed repayment tenure ranging between2 to 5 years. But what if your financial situation improves, and you want to pay off the loan faster? What happens if you try to repay a ₹5 lakh personal loan in just 9 months instead of 3 years? Can you really benefit from doing so?

At IDFC FIRST Bank, we encourage financially smart decisions. So, we ran the numbers for you.

Repayment Cost for ₹5 Lakh Personal Loan: A Comparison
 

Let’s say you’ve taken a ₹5,00,000 personal loan at 9.99% p.a. interest — the rate offered on FIRSTmoney Personal Loan (subject to eligibility and credit score). Here’s how the total cost differs across repayment tenures:

Key Insight:
 

Clearly, the shorter the tenure, the less you pay in interest. But your monthly burden increases significantly.

So, Should You Repay Your Personal Loan Early?
 

It depends on your financial flexibility. Here are some things to keep in mind:

When Early Repayment Makes Sense:
 

• You’ve received a bonus or have a side income that you can set aside
• You want to reduce your overall debt exposure
• You're saving more on interest than you'd earn by investing the same funds elsewhere

When an Early Repayment Might Not Be Ideal:
 

• You risk straining your liquidity or emergency fund
• Your loan provider charges exorbitant foreclosure/prepayment penalties

What Are the Hidden Charges to Watch for During Prepayment
 

Not all loan providers are upfront about the actual cost of closing your personal loan early. Here are some common hidden charges you should check before making a prepayment:

FIRSTmoney Personal Loan is Prepayment-Friendly
 

With IDFC FIRST Bank’s FIRSTmoney Personal Loan, we keep things simple:

✅ Zero foreclosure charges
✅ No lock-in period for prepayment
✅ 100% digital process
✅No hidden fees

Key Benefits:

• Loan Amount: Up to ₹10 lakhs
• Interest Rates: Starting at 9.99% p.a.
• Tenure: Flexible from 9 to 60 months
• Prepayment Policy: No charges on foreclosure, repay anytime
• Disbursal: Instant and 100% digital process

FIRSTmoney Personal Loan: Flexibility Beats Rigidity
 

At IDFC FIRST Bank, we believe in rewarding discipline, not penalizing it. That’s why we’ve built our digital loan experience around your financial convenience, not hidden fine print.

So, whether you want to space out your repayments over 5 years or close the loan in 9 months flat, you’re in control.

Ready to explore a smarter loan option?
 

Check your loan eligibility in minutes with our instant, paperless FIRSTmoney Personal Loan experience. Get instant funds up to ₹10 lakhs.

👉 Apply Now