ECLGS 5.0 allows part-prepayment and full prepayment at nil charges during the entire 60-month loan tenor. Check your pre-approved offer online using your registered mobile number and OTP to explore ECLGS funding solutions from Bajaj Finance.
In summary
- ECLGS 5.0 permits borrowers to make part-prepayments or fully prepay their loan at any time without prepayment charges, foreclosure penalties, or lock-in restrictions.
- The loan carries a total tenor of 60 months, including a 12-month principal payment standstill followed by a 48-month Dropline EMI repayment period.
- Every prepayment directly reduces the outstanding principal and lowers future interest costs because interest is charged only on the utilised amount.
- Borrowers can choose between part-prepayment to retain access to the facility or full prepayment to close the loan completely.
- Both options are available throughout the loan tenure without additional charges.
- Bajaj Finance offers ECLGS funding solutions designed to support eligible businesses with flexible repayment options. This page explains ECLGS prepayment rules, part-prepayment versus full prepayment, the prepayment process, interest savings, and factors to consider before making a prepayment.
What are the ECLGS loan prepayment rules?
ECLGS loan prepayment rules allow borrowers to repay a portion or the entire outstanding loan balance before the scheduled maturity date without incurring any prepayment charges. Under ECLGS 5.0, borrowers can make part-prepayments or full prepayments at any point during the 60-month loan tenor.
The scheme does not impose:
- Prepayment charges.
- Foreclosure penalties.
- Lock-in periods.
Every prepayment reduces the outstanding principal, which in turn lowers future interest costs. Borrowers can initiate prepayments through the available servicing channels and the loan account is updated after successful payment processing.
Are there any prepayment charges or penalties on an ECLGS loan?
The ECLGS scheme follows a borrower-friendly prepayment framework with no additional charges for early repayment.
Key prepayment-related features
- Part-prepayment charges: Nil.
- Full prepayment charges: Nil.
- Foreclosure charges: Nil.
- Prepayment penalty: Nil.
- Lock-in period: None.
- Prepayment availability: Throughout the loan tenure.
This means borrowers can reduce their outstanding balance or close the loan completely whenever surplus funds become available, without paying any fee for doing so.
Part-prepayment vs full prepayment of an ECLGS loan
Borrowers can choose between part-prepayment and full prepayment depending on their funding requirements and repayment goals.
| Particulars | Part-prepayment | Full prepayment |
|---|---|---|
| Loan account status | Remains active | Closed completely |
| Amount paid | Portion of outstanding balance | Entire outstanding balance |
| Future interest | Reduced | Stops completely |
| Future EMIs | Continue | End completely |
| Facility access | Continues | Ends |
| Charges | Nil | Nil |
Part-prepayment
Part-prepayment involves paying a portion of the outstanding principal while keeping the loan active.
Key benefits include:
- Immediate reduction in outstanding balance.
- Lower future interest costs.
- Continued access to the loan facility.
- Greater repayment flexibility.
This option is suitable for businesses that want to reduce borrowing costs while retaining access to available funding.
Full prepayment
Full prepayment involves repaying the entire outstanding principal and accrued interest, resulting in complete loan closure.
Key benefits include:
- Elimination of future interest costs.
- Closure of all remaining repayment obligations.
- Receipt of closure-related documents such as the NOC.
- Complete exit from the loan facility.
This option is suitable when the borrower no longer requires the facility.
Prepaying during the interest-only year vs the Dropline EMI phase
Borrowers can make prepayments throughout the ECLGS loan tenure, but the impact differs depending on the repayment stage.
During the interest-only year (Months 1-12)
During the first 12 months, borrowers service only interest while the principal remains largely unchanged.
Benefits of prepaying during this phase include:
- Reduction in the principal base on which future interest is calculated.
- Greater long-term interest savings.
- Lower interest obligations during subsequent months.
- Better preparation for the repayment phase beginning in month 13.
Because interest savings accumulate over a longer period, prepaying early in the tenure generally delivers the greatest benefit.
During the Dropline EMI phase (Months 13-60)
Once the Dropline EMI phase begins, prepayments continue to reduce the outstanding principal.
Benefits include:
- Lower future interest costs.
- Reduced repayment burden.
- Faster loan payoff.
- Improved debt position.
Regardless of the phase, earlier prepayments generally result in greater overall savings.
How to prepay your ECLGS loan: Step-by-step process
Making a prepayment on an ECLGS loan is a straightforward process.
Step 1: Access your loan account
Log in through the designated customer servicing platform and navigate to your ECLGS loan account.
Step 2: Review the outstanding balance
Check the current principal outstanding and verify the amount you wish to prepay.
Step 3: Choose the repayment option
Select one of the available options:
- Part-prepayment.
- Full prepayment (foreclosure).
Step 4: Enter the prepayment amount
For part-prepayments, enter the desired payment amount. For full prepayment, review the total outstanding amount displayed by the system.
Step 5: Verify payment details
Confirm the repayment amount and review the applicable loan details before proceeding.
Step 6: Complete the payment
Make the payment through the available repayment channels. Once the payment is successfully processed, the loan account is updated accordingly.
Step 7: Download confirmation documents
After the transaction is completed:
- Part-prepayment customers can download updated loan statements.
- Full prepayment customers can download closure documents including the NOC and closure letter.
Step 8: Verify updated loan records
Review the updated account information to confirm that the prepayment has been reflected correctly in the loan records.
How prepayment reduces your ECLGS interest and outstanding balance
Prepayment is one of the simplest ways to lower the total cost of borrowing under ECLGS.
Key effects of prepayment
- Reduces the outstanding principal balance.
- Lowers future interest obligations.
- Improves overall debt position.
- Accelerates loan repayment.
- Helps borrowers reduce total borrowing costs.
Example
Suppose a borrower has an outstanding balance of Rs. 10,00,000 and makes a part-prepayment of Rs. 2,00,000.
The revised principal outstanding becomes:
Rs. 10,00,000 − Rs. 2,00,000 = Rs. 8,00,000
Since future interest is calculated on the reduced principal balance, the borrower pays less interest over the remaining loan tenure.
Documents and confirmation you receive after prepaying an ECLGS loan
Borrowers receive updated records after making a prepayment.
After part-prepayment
Borrowers can access:
- Updated statement of account.
- Revised outstanding balance information.
- Updated repayment details.
After full prepayment
Borrowers can access:
- No Objection Certificate (NOC).
- Loan closure letter.
- Updated statement showing nil outstanding.
- Closure confirmation records.
These documents should be retained carefully for future reference and verification purposes.
When should you prepay your ECLGS loan and when should you hold off?
Prepayment decisions should be aligned with business cash-flow requirements and financial objectives.
Consider prepaying when
- Surplus funds are available.
- Reducing interest costs is a priority.
- You want to lower future repayment obligations.
- You no longer require the facility.
Consider waiting when
- Working capital requirements remain high.
- The business expects near-term funding needs.
- Available cash can generate a higher return through business deployment.
- Maintaining liquidity is a higher priority.
Since ECLGS does not impose prepayment penalties, the decision largely depends on the most effective use of available funds.
What are the pros and cons of prepaying your ECLGS loan early?
Prepaying your ECLGS loan ahead of schedule can help reduce borrowing costs, although there are certain factors worth evaluating before making the decision.
Advantages
- Nil prepayment charges.
- Nil foreclosure charges.
- No lock-in restrictions.
- Reduced future interest costs.
- Improved debt position.
- Greater repayment flexibility.
- Option to close the loan completely when required.
Considerations
- Funds used for prepayment are no longer available for immediate business use.
- Full prepayment closes the facility permanently.
- Liquidity requirements should be assessed before making large prepayments.
- Alternative investment opportunities should be evaluated alongside interest savings.
Understanding these factors can help borrowers determine the right prepayment strategy for their business.
Should you prepay your ECLGS loan early?
Prepayment is one of the most flexible features available under ECLGS 5.0. Since there are no prepayment charges, foreclosure penalties, or lock-in restrictions, borrowers can reduce their outstanding balance or close the loan completely whenever it aligns with their financial objectives.
Businesses should compare the interest savings from prepayment against alternative uses of available capital before making a decision. Borrowers looking for additional funding options can also explore business loans offered by Bajaj Finance.
Understanding the applicable business loan interest rate can help businesses evaluate borrowing costs more effectively. Businesses can also estimate repayment obligations using the business loan EMI calculator before making financing decisions.
