How to Make Advance Payment for Auto Loan?

Auto loan advance payment refers to paying a portion of your loan amount or EMIs before their scheduled due dates. It can be done in two ways:

1. Prepaying EMIs upfront: Borrowers can pay multiple EMIs at once, reducing the monthly payment burden for the upcoming months.
2. Making lump-sum payments toward the principal: This reduces the outstanding loan amount, thereby lowering the interest payable over the loan tenure.

Unlike regular EMI payments, advance payments give borrowers the flexibility to manage their finances more efficiently. For instance, if you have an auto loan of Rs. 10,00,000 with a tenure of five years, paying Rs. 2,00,000 upfront toward the principal can significantly reduce the total interest payable and shorten the loan tenure.

How Bajaj Finserv simplifies advance EMI payment

Bajaj Finserv makes it easy for borrowers to manage their auto loans through its online portal and mobile app. By logging in with your registered mobile number, you can make advance payments in a few simple steps.

Pro Tip: Use the Bajaj Finserv app to schedule advance payments and track your loan details conveniently.

One of the key advantages of making advance payments is the potential savings on interest. When you pay a portion of your loan early, the outstanding principal reduces, leading to lower interest accumulation in subsequent EMIs.

Step-by-step savings breakdown

Let us consider a hypothetical example:

• Loan amount: Rs. 10,00,000
• Interest rate: 10% p.a.
• Loan tenure: 5 years

If you make a lump-sum advance payment of Rs. 2,00,000 during the first year, here is how it impacts your loan:

1. Reduced principal: The outstanding loan amount decreases to Rs. 8,00,000.
2. Lower interest: Interest is calculated on the reduced principal, saving you thousands of rupees over the tenure.
3. Shortened tenure: Advance payments can also shorten the loan duration, allowing you to close your loan earlier.

Use Bajaj Finserv’s savings calculator

To estimate your savings accurately, use the Bajaj Finserv Auto Loan Savings Calculator. This tool provides a clear picture of how advance payments impact your loan and helps you make informed financial decisions.

Advance payments not only reduce your financial burden but also positively impact your CIBIL score. Here is how:

1. Improved credit utilisation: Paying off a portion of your loan reduces your debt-to-income ratio, which is a key factor in calculating your credit score.
2. Timely payments: Regular advance payments demonstrate financial discipline, boosting your creditworthiness.
3. Eligibility for better loan terms: A higher CIBIL score can make you eligible for lower interest rates and better terms on future loans, such as home loans or personal loans.

Risks to watch out for

While advance payments are beneficial, it is essential to ensure that you do not miss subsequent EMIs after making an advance payment. Delayed payments can negatively impact your credit score and lead to penalties.

Conclusion

Making advance payments on your auto loan is a strategic financial move that offers multiple benefits, including reduced interest, lower financial stress, and improved creditworthiness. Bajaj Finserv simplifies the process with user-friendly tools and services, enabling borrowers to manage their loans efficiently.

Whether you want to prepay EMIs or make lump-sum payments, the Bajaj Finserv portal and app provide seamless options to help you save money and achieve financial freedom.

By understanding the process, benefits, and savings associated with auto loan advance payments, you can make informed decisions and enjoy a smoother financial journey. Use Bajaj Finserv’s resources to unlock the full potential of advance payments and secure a brighter financial future.