The Key Advantages of Prepaying Your Personal Loan

Prepaying a personal loan is a financially wise decision that can significantly benefit borrowers. By opting for early loan repayment, you can reduce the total interest paid over the loan's tenure, thus saving money in the long run. Additionally, loan prepayment can improve your credit score and free up your finances for other purposes.

One reason that might make you hesitant about prepaying a personal loan is the penalty fee that some banks might levy for foreclosing the loan. This is thankfully not a problem with FIRSTmoney, IDFC FIRST Bank’s smart personal loan that does not include any foreclosure charges. Go through this article to explore the advantages of loan prepayment, the specific features of FIRSTmoney smart personal loans, and the financial implications of prepaying a personal loan. 

How does FIRSTmoney support prepayment?
 

With a FIRSTmoney loan, you can clear your outstanding dues anytime without worrying about foreclosure charges. As a borrower, you can get instant access to amounts of up to ₹10 lakhs with the flexibility to draw money multiple times up to your approved limit and pay EMIs only on the used funds. What makes it stand out from other loans is that you have the choose to pay off the entire loan amount before loan maturity without any additional cost. This flexibility ensures that you can take advantage of any surplus funds to reduce your debt burden. 

Key benefits of FIRSTmoney smart personal loans
 

Want to know more about FIRSTmoney? Here’s why you should consider this smart personal loan:

• Foreclosure benefits:

FIRSTmoney offers zero foreclosure charges in case you wish to close your loan in full before your repayment tenure ends. You can use the personal loan and repay the used funds in full anytime without incurring a foreclosure charge. The repaid amount will reflect in your accessible loan offer once successfully paid. 

• Personal loan amount flexibility:

Enjoy the flexibility of availing multiple loans as and when needed. Once approved, you can obtain a single loan or multiple loans on-demand, depending on your requirements.

• 100% digital journey:

With FIRSTmoney, experience a complete digital journey with zero paperwork. Simply scan the QR code to begin the application process, where you need your PAN card to complete the video KYC process.

• Multiple Loans: Anytime, Anywhere OR Multiple On-demand Loans:

With FIRSTmoney, access funds whenever needed without reapplying for a new loan.

• Flexible loan repayment options:

Get the flexibility to choose a customisable loan EMI plan that suits your requirements. Opt for any tenure ranging between 2 months to 60 months to repay your loan without financial stress.

• Swift disbursal:

Enjoy a completely paperless application process. The advanced technology behind FIRSTmoney makes it easy to access a personal loan instantly with a completely online process.

Financial implications of prepaying a personal loan
 

Prepaying your personal loan can have several financial implications that enhance your overall financial health:

1. Interest savings:

The most significant advantage of loan prepayment is the reduction in the total interest paid. Since interest is typically calculated on the outstanding principal amount, reducing this principal early on leads to substantial interest savings.


2. Enhanced financial flexibility:

Clearing off your debt early gives you greater financial flexibility. With no monthly EMI obligations, you can allocate your resources towards other financial goals, such as investments, savings, or other expenses.

3. Lower financial stress:

Being debt-free or having a lower debt burden can significantly reduce financial stress and contribute to a healthier financial mindset.

4. Opportunity cost:

While prepaying your loan saves on interest, it is also essential to consider the opportunity cost. Evaluate whether the funds used for prepayment could potentially yield higher returns if invested elsewhere.

Conclusion

Prepaying your personal loan is a smart financial move that offers numerous benefits, including interest savings, an improved credit score, and enhanced financial flexibility. IDFC FIRST Bank’s FIRSTmoney provides convenient prepayment options that make early loan repayment convenient and cost-effective.

By carefully considering your financial situation and the advantages of loan prepayment, you can make informed decisions that lead to long-term financial health and stability. Whether you aim to reduce your debt burden or achieve financial freedom sooner, the ability to prepay your personal loan is a valuable tool.