How to Make Advance Payment for Secured Loan?

A secured loan advance payment refers to the process of paying one or more EMIs (Equated Monthly Instalments) in advance before their due date. This is typically done to reduce the financial burden or to save on interest costs. With Bajaj Finserv, you can conveniently make advance payments using their secure online portals or mobile app.

For instance, imagine you have taken a secured loan of Rs. 20 lakh with a tenure of 10 years. If you decide to pay six months’ worth of EMIs in advance, you can either reduce the loan tenure or lower the total interest payable. This flexibility can help you manage your finances better while ensuring timely repayment.

Bajaj Finserv simplifies the advance payment process by offering:

• User-friendly platforms: Make payments through their website or app.
• Transparency: Access detailed loan statements and payment schedules.
• Flexibility: Choose partial or full advance payments based on your financial goals.

Advance payments are particularly beneficial for individuals who receive periodic bonuses, inheritances, or other lump-sum funds. By using these funds for advance EMI payments, you can significantly reduce your financial stress.

One of the primary benefits of making a secured loan advance payment is the potential to save on interest costs. When you prepay a portion of your loan, the outstanding principal reduces, which in turn lowers the interest charged on the remaining balance.

Example Calculation:

Let us consider a secured loan of Rs. 10 lakh with an interest rate of 10% per annum and a tenure of 5 years.

Without Advance Payment:
Total interest payable over 5 years = Rs. 2,75,000

With Advance Payment of Rs. 2 lakh in Year 2:
Revised total interest payable = Rs. 2,10,000
Savings on interest: Rs. 65,000

This example demonstrates how even a partial advance payment can result in significant savings.

To calculate your potential savings, Bajaj Finserv offers a loan savings calculator. This tool allows you to input your loan details, advance payment amount, and tenure to estimate the interest savings. Use the Bajaj Finserv Loan Savings Calculator to plan your repayments effectively.

Additionally, advance payments can help you:

• Reduce loan tenure: Pay off your loan faster.
• Lower EMI burden: Decrease your monthly instalments, freeing up cash flow.

It is important to note that some lenders may charge a nominal fee for advance payments. Bajaj Finserv provides complete transparency regarding such charges on their Fees and Charges page. 

Making a secured loan advance payment can positively impact your CIBIL score and improve your chances of securing future loans. Here is how:

Positive Effects:

Improved Creditworthiness:
Advance payments demonstrate financial discipline and the ability to manage funds efficiently. This builds trust with lenders, reflecting positively on your credit report.

Reduced Debt-to-Income Ratio:
By lowering your outstanding loan amount, your debt-to-income ratio improves, which is a critical factor in determining your creditworthiness.

Better Loan Terms in the Future:
A strong repayment history, enhanced by advance payments, can help you secure loans with more favourable terms, such as lower interest rates or higher limits.

Potential Risks:

While advance payments are beneficial, missing subsequent EMIs after making an advance payment can negatively impact your CIBIL score. For instance, if you make a six-month advance payment but fail to pay the seventh EMI on time, it will be recorded as a default.

To avoid such situations, consider the following tips:

• Set reminders for EMI due dates after the advance payment period ends.
• Use Bajaj Finserv’s automated alerts and notifications to stay on track.
• Regularly monitor your repayment history through Bajaj Finserv’s secure portal.

By strategically managing your secured loan and maintaining a strong credit profile, you can ensure financial stability and access to future credit when needed. 

Conclusion

Secured loan advance payment is a powerful tool for managing your finances effectively. Whether you aim to save on interest, reduce your loan tenure, or improve your credit profile, advance payments offer flexibility and control over your repayment journey.

With Bajaj Finserv, the process of making advance payments is seamless and transparent. From user-friendly tools like the loan savings calculator to automated alerts for EMI schedules, Bajaj Finserv ensures a hassle-free experience.

Take charge of your financial future today. Log in to Bajaj Finserv’s secure portal to explore advance payment options and start saving on your secured loan.