How to Repay Your Personal Loan Faster

How to Repay Your Personal Loan Faster

You repay your personal loan faster by choosing a shorter tenure or by part-prepaying when you have surplus money. A shorter tenure saves more interest; part-prepayment keeps the monthly instalment lower.
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Rs. 40,000 - Rs. 75 lakh

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In summary

Interest on a personal loan runs on the principal still outstanding, so anything that cuts the principal early shortens the loan and saves interest. A Rs. 60,000 part-prepayment after 12 equated monthly instalments (EMIs) on a Rs. 3.6 lakh loan saves Rs. 24,764 and 8 months. Paying a higher EMI from the start saves more. To repay faster sensibly, keep an emergency fund and set any prepayment charge against the saving.


  • Early prepayments save the most.
  • A higher EMI from the start shortens the loan.
  • Clear the costliest debt first.

  • Keep an emergency fund before prepaying.


Planning a loan you can close early? Check your loan offer with your phone number and a one-time password (OTP) → apply online → receive funds within 24 hours* of approval.

Why does paying early save so much?

Each EMI covers the interest due that month, and the rest repays principal. In the early months, the principal is at its largest, so interest takes a big share of each EMI. Money you pay over and above the EMI goes straight to principal. That cuts the interest charged in every later month, not just the next one, and helps you repay faster.

The timing matters. A part-prepayment in year 1 removes interest for the whole remaining tenure; the same amount in the final year removes very little. If you plan to repay faster, act in the first half of the tenure.

 

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How much does a part-prepayment save?

A lump sum paid towards principal, such as a bonus or a maturing deposit, is the most direct way to repay faster. When you keep the same EMI, the tenure shortens. The table shows a Rs. 60,000 part-prepayment after 12 EMIs on Rs. 3.6 lakh borrowed at an illustrative 13% for 48 months.


Rs. 3.6 lakh at 13% over 48 months (Rs.)No part-prepaymentRs. 60,000 paid after 12 EMIs
Principal left after 12 EMIs2,86,6352,26,635
EMIs left3628
Interest from month 13 on61,04736,283

Last updated: 26th October, 2026


The prepayment saves Rs. 24,764 of interest and 8 EMIs. On a Term Loan, a part-prepayment charge applies, set out in your loan agreement and on this page. Subtract it from the saving: if the saving is still larger, prepay.

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Should you choose a higher EMI from the start?

If your budget allows, a higher EMI from day 1 is a steady way to repay faster, working like a part-prepayment every month. The table compares the standard EMI on the same loan with a payment of Rs. 11,000, which you can lock in by choosing a shorter tenure when you take the loan.


Monthly payment (Rs.)Months to closeTotal interest (Rs.)
9,658481,03,579
11,0004186,953

Last updated: 26th October, 2026


Paying Rs. 1,342 more each month helps you repay faster: the loan closes 7 months sooner and Rs. 16,626 is saved. The catch is that a higher EMI is fixed for the tenure. Choose it only if a month with an unexpected bill would still leave room.


Gayatri's plan

Gayatri, 37, runs process lines at a Vadodara chemical plant as a salaried engineer. Her monthly pay is Rs. 82,000, and her CIBIL score stands at 771. She borrowed Rs. 3.6 lakh, the loan in the tables above, to build a room on her parents' house, at an illustrative 13% per annum. Wanting to repay faster without straining her budget, she set the EMI at 3 years beside 4.

EMI = P × R × (1 + R)^N ÷ [(1 + R)^N − 1]. Here P = Rs. 3,60,000, R = 13 ÷ 1,200 and N = months.


TenureMonthly EMI (Rs.)Total interest (Rs.)EMI as share of salary (%)
36 months (3 years)12,13076,67414.8
48 months (4 years)9,6581,03,57911.8

Last updated: 26th October, 2026


The 4-year EMI is Rs. 2,472 lower but costs Rs. 26,905 more in interest. Up to Rs. 14,868 would go on the processing fee. Gayatri chose 48 months for the lower fixed EMI and a plan to repay faster: a part-prepayment from her annual bonus each year.


What can delay approval: a CIBIL score below 650 or existing EMIs that take up a large share of your income. Names or addresses that do not match across documents, and more than one loan application in the same month, can also slow it down.

Want a loan you can pay down early? With a Bajaj Finance Personal Loan, you can borrow Rs. 40,000 to Rs. 75 lakh, subject to eligibility. Check your loan offer with your phone number and a one-time password (OTP) → apply online → receive funds within 24 hours* of approval.

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Which debt should you clear first?

If you have more than one loan or card balance and want to repay faster, the order matters. There are 2 methods, and they suit different people:

  • Costliest rate first (avalanche): Put every spare rupee on the debt with the steepest rate, in most cases a credit card, while paying the minimum on the rest. This saves the most interest.
  • Smallest balance first (snowball): Clear the smallest debt first, then roll its payment into the next. It costs more interest, but closing accounts early keeps some people motivated.

If the goal is to repay faster at the least cost, the avalanche method wins. A card balance at 36% a year should be cleared before a personal loan at 13%, whatever their sizes.

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When does paying early not make sense?

Trying to repay faster is not always the right call. Hold back in these cases:

  • No emergency fund: Money used to prepay cannot be borrowed back cheaply. Keep 3 to 6 months of expenses aside first.
  • A costlier debt elsewhere: Clear a credit card balance before prepaying a cheaper personal loan.
  • The loan is nearly over: In the last few months, little interest is left to save, and the charge can outweigh it.
  • The charge outweighs the saving: Work out both before paying. If the charge is larger, keep paying the EMI.
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What habits help you clear the loan sooner?

Small, steady habits help you repay faster, and build a lump sum without a windfall:

  • Prepay from every raise: When your salary rises, send part of the increase to the loan instead of letting spending grow.
  • Use windfalls: Bonuses, tax refunds and maturing deposits are natural moments to make a part-prepayment.
  • Set the EMI date after payday: Auto-debit 1 to 3 days after salary credit means no late fee eats into what you could prepay.
  • Track the principal: Check your loan statement in My Account every quarter to see the balance falling.
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Can you prepay a personal loan?

Yes. Part-prepayment and early closure of a Bajaj Finance Personal Loan are done through My Account, subject to the charges in your agreement. It offers Rs. 40,000 to Rs. 75 lakh over 12 months to 108 months, for Indian nationals aged 21 years to 80 years with a CIBIL score of 650 or more. Pick the tenure with your plan to repay faster in mind.

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Key offerings: 3 loan types

  • Flexi Hybrid Loan
  • Flexi Dropline Loan
  • Term Loan

  • Withdraw and prepay – no extra charges
    You can withdraw from your limit and prepay as many times as you want, without extra charges.

  • Instalment pattern
    You can pay interest-only EMIs for up to 36 months, after which, the EMI will consist of both, the principal and the interest. EMI is applicable only on the withdrawn amount.

  • Flexi facility charges
    Flexi facility charges applicable based on your loan amount.

  • Withdraw and prepay – no extra charges
    You can withdraw from your limit and prepay as many times as you want, without extra charges.

  • Instalment pattern
    Fixed EMIs that cover both the principal and interest on the loan amount you withdraw.

  • Flexi facility charges
    Flexi facility charges applicable based on your loan amount.

  • Amount disbursed in one go
    The entire loan amount is disbursed at the start.

  • Instalment pattern
    Fixed EMIs that cover both the principal and interest.

  • Flexi facility charges
    No Flexi facility charges.

Personal loan interest rate and applicable charges

Type of fee

Applicable charges

Rate of interest per annum

10% to 30.5% p.a.

Processing fees

Up to 4.13% of the loan amount (inclusive of applicable taxes).

Flexi Facility Charge

Term Loan – Not applicable

Flexi Loans –Up To Rs 1,999 To Up To Rs 18,999/- (Inclusive Of Applicable Taxes)

Will be deducted upfront from loan amount.

Bounce charges

Rs. 700 to Rs. 1,200/- per bounce

“Bounce charges” shall mean charges for (i) dishonor of any payment instrument; or (ii) non-payment of instalment (s) on their respective due dates due to dishonor of payment mandate or non-registration of the payment mandate or any other reason.

Part-prepayment charges

Full Pre-payment:

  • Term Loan: Up to 4.72% (Inclusive of applicable taxes) on the outstanding loan amount as on the date of full pre-payment

  • Flexi Term (Dropline) Loan: Up to 4.72% (Inclusive of applicable taxes) on the outstanding loan amount, as on the date of full prepayment.

  • Flexi Hybrid Term Loan: Up to 4.72% (Inclusive of applicable taxes) on the outstanding loan amount, as on the date of full prepayment.

Part Pre-payment

  • Up to 4.72% (Inclusive of applicable taxes) of the principal amount of Loan prepaid on the date of such part Pre-Payment.

  • Not Applicable for Flexi Term (Dropline) Loan and Flexi Hybrid Term Loan.

Penal charge

Delay in payment of instalment(s) shall attract Penal Charge at the rate of up to 36% per annum per instalment from the respective due date until the date of receipt of the full instalment(s) amount.

Stamp duty (as per respective state)

Payable as per state laws and deducted upfront from loan amount.

Annual maintenance charges

Term Loan: Not applicable

Flexi Term (Dropline) Loan:

Up to 0.295% (Inclusive of applicable taxes) of the Dropline limit (as per the repayment schedule) on the date of levy of such charges.


Flexi Hybrid Term Loan:

Up to 0.472% (Inclusive Of Applicable Taxes) Of The Dropline Limit During Initial Tenure. Up to 0.295% (Inclusive Of Applicable Taxes) Of Dropline Limit During Subsequent Tenure

Credit guarantee scheme feeUp to 1.18% p.a. (pro-rated daily till 31st March) (inclusive of all applicable taxes) of the loan amount
Credit guarantee scheme renewal feeUp to 1.18% p.a. (inclusive of all applicable taxes) on the outstanding loan amount as on April 01 of the subsequent Financial Year.
*Renewal Fee to be collected only for 3 subsequent financial years.
 
**If the Remaining Tenure is less than 12 months, the CG Fee in subsequent years shall be charged prorated.

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Frequently asked questions

Repaying faster

Charges

Which way repays a personal loan soonest?

Choosing a shorter tenure from the start lets you repay faster, since every EMI repays more principal. In Vikram's example, 36 months instead of 48 saved Rs. 28,447 in interest. If your EMI must stay low, part-prepaying a bonus each year helps you repay your personal loan faster without a higher monthly payment.

A shorter tenure saves more interest if you can afford the higher EMI every month. Prepayments let you repay faster too; they save less but keep the EMI lower and depend on surpluses arriving. On Rs. 3.5 lakh at 14%, the shorter tenure saved Rs. 28,447 and 3 prepayments saved Rs. 19,644 when Vikram set out to repay your personal loan faster.

It depends on the variant. Flexi Dropline and Flexi Hybrid Loans allow part-prepayment with no extra charge. On a Term Loan, part-prepayment and foreclosure charges apply, as listed in the fees table. Weigh the interest saved against the charge before you repay your personal loan faster, and read your Key Fact Statement.

Yes. Foreclosure lets you repay the full outstanding principal before the tenure ends, subject to the foreclosure charge in the fees table and your Key Fact Statement. Check the outstanding amount in My Account first, and make sure you keep an emergency fund after closing the loan, even when you want to repay faster.

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