Loans are usually repaid in small monthly instalments spread over a pre-defined period. These monthly instalments also known as EMIs (equated monthly instalments) get deducted on a pre-set date from your registered bank account. This instalment usually consists of the principal amount and the interest accrued.
In addition to the regular EMIs however, there are other payment options that allow you to repay your loan faster. One such payment method is part-prepayment.
What is the meaning of part-prepayment?
Part-prepayment or partial prepayment is a way to repay a lump-sum amount ahead of schedule during the loan tenure. In case you have surplus funds, you can pay a part of your loan early with this payment option. This is an easy way to save on your interest as the amount you paid gets adjusted against the outstanding principal. Paying a part of your loan will either result in reducing your EMI or loan tenure.
Things to keep in mind before part-prepayment
Check your loan agreement
- Review the loan agreement before part-prepaying your loan.
- The agreement includes details such as:
- Part-prepayment charges.
- Minimum part-prepayment amount.
- Other applicable conditions.
Review your account statement
- Examine your account statement to understand your:
- Outstanding principal amount.
- Interest amount due.
- This helps in selecting an optimal part-prepayment amount and planning your repayment effectively.
Part-prepayment conditions for Bajaj Finance loans
- Part-prepayment conditions vary based on the loan variant.
- Bajaj Finance offers three types of loan variants:
- Term Loan
- Flexi Term Loan
- Flexi Hybrid Loan
Part-prepayment for Term Loan
- With surplus funds, you can:
- Choose to lower your EMIs or reduce the loan tenure.
- A fee, calculated as a percentage of the part-prepayment amount, is applicable.
Part-prepayment for Flexi Term and Flexi Hybrid Loans
- Part-prepay as often as desired without additional fees.
- Part-prepayment leads to:
- Reduced EMIs.
- An increased available loan limit.
Convenient digital channels for part-prepayment
- For a seamless process, use digital platforms such as:
- Go to your account
- Click ‘Pay Now’ and proceed with the secured payment gateway to part-prepay your loan from home.
Benefits of loan part payment
- Reduces the outstanding principal
By making a part payment, you directly reduce your loan's principal balance, which in turn decreases the total interest payable over the loan tenure. - Lowers EMI amount
Part payment can reduce your monthly EMI, making it easier to manage monthly finances and freeing up funds for other expenses or investments. - Shortens loan tenure
Alternatively, part payment allows you to reduce the loan tenure if you prefer to stay on the same EMI schedule. This helps you become debt-free sooner and saves on interest payments. - Saves interest costs
Since interest is calculated on the remaining principal, reducing this balance through part payments can substantially lower your overall interest burden, offering long-term savings. - Improves financial flexibility
Lower EMIs or a reduced loan tenure can offer more flexibility in managing finances, allowing you to allocate funds to savings, investments, or other financial goals. - Enhances credit score
Consistently making part payments reflects positively on your repayment behaviour, helping to improve or maintain a high credit score, which is beneficial for future credit applications. - Reduces debt burden gradually
Regular part payments help in gradually reducing your debt, which can bring peace of mind and lessen financial stress associated with long-term debt. - Offers flexibility for Flexi Loans
For Flexi Loans, you can make part payments without incurring additional fees, increasing the available credit limit and allowing greater freedom in managing funds. - Enables customised repayment strategy
Part payment options allow you to choose how to adjust your loan — by lowering EMI or tenure — based on your financial situation and goals.
