Personal Loans are one of the most in-demand financial products in the country. They are popular because of the flexibility and accessibility they offer during the hour of need. Personal Loans have the fastest disbursement period and do not require any collateral. To apply for Instant Loan Online, one has to be 20 years of age, self-employed or salaried and have a regular source of income.. This is standard criteria, however, this rule may not be the same everywhere and vary across organisations. Apart from the above points, to avail of a Personal Loan, one has to have a good credit score. A credit score above 700 is ideal for a Personal Loan application to get approved.
What does it mean to prepay a Personal Loan?
When you decide to prepay a Personal Loan, it means clearing the entire outstanding balance before the original tenure ends. Instead of continuing with EMIs, you repay the full loan amount in one go. This helps borrowers to pay off the loan sooner, reduce financial stress and save money on future interest payments.
Advantages of Personal Loan Prepayment
The most important benefits of a Personal Loan prepayment are:
- It offers significant savings on interest.
- It also helps borrowers achieve financial freedom earlier than planned.
- With no EMI burden, you can redirect funds towards other goals and enjoy greater financial flexibility and peace of mind.
What is Part Payment of Personal Loan?
Part payment of a Personal Loan involves paying a portion of the outstanding principal as a lump sum while continuing with regular EMIs. Unlike full prepayment, the loan account remains active. This option reduces the overall outstanding balance, lowering the interest burden and potentially shortening the remaining repayment tenure.
Benefits of Part Payment of Personal Loan
Below are the important benefits of a Personal Loan part payment:
- The main benefit of part payment is that it reduces your loan’s principal, which directly lowers the interest you pay over time.
- It can also reduce the EMI amount or shorten your tenure.
- This flexibility helps manage finances better, use surplus income wisely and ease long-term repayment stress without closing the loan.
How Does One Check the Eligibility for a Personal Loan?
Personal Loan eligibility is primarily assessed on factors such as age, job stability, monthly income, credit bureau score, past repayment trends and current repayment capacity. A strong employment history and good credit record can improve approval chances.
However, if you wish to check your eligibility for a Personal loan with ICICI Bank, you can use the ICICI Bank Personal Loan eligibility calculator. Just enter your monthly income, existing EMIs, and loan duration and the calculator shows an indicative eligible loan amount, giving you a quick estimate before applying.
What Can a Personal Loan Be Used For?
Almost every category of a loan has a defined role or a purpose. For example, a Home Loan is taken to purchase property and Auto Loan to buy a vehicle. But that is not the case for Personal Loans. They can be used for anything. They can be used for medical treatment, education, consolidating debt, wedding and even a vacation. The borrower will never be questioned about the purpose of the loan.
What Is the Repayment Period for a Personal Loan?
The repayment period for a Personal Loan ranges between 12 – 72 months. Some people use the entire tenure to repay the loan while some prefer prepayment, and some even make partial prepayments.
What Is Personal Loan Prepayment?
Generally, once a loan is availed; it is repaid in Equated Monthly Instalments (EMIs) till the end. However, when people have surplus cash at their disposal, they consider closing the loan by paying off the outstanding principal.
Depending on the lender’s terms and conditions, a prepayment penalty could be charged, but that fee is nominal. Personal Loan prepayment benefits people by allowing them to save money that would have been spent on the interest rate. People use this opportunity to reinvest the money saved or use it for personal expenses.
FAQ
How does part payment benefit a Personal Loan?
Part payment of Personal Loan reduces the outstanding principal, lowering overall interest payable. It also helps in either reducing EMIs or shortening tenure, allowing better financial management and faster repayment without closing the loan entirely. Choosing a Personal Loan with part payment option gives you flexibility to manage repayment as per your convenience.
Can I reduce my EMI through part payment?
Yes, part payment of Personal Loan gives flexibility to lower monthly EMIs by reducing the principal amount. Alternatively, you can keep the EMI unchanged and reduce the tenure, helping you close the loan earlier with less interest.
Are there any charges for prepaying a Personal Loan with ICICI Bank?
Yes, ICICI Bank charges about 3% + applicable taxes on the outstanding principal if you prepay Personal Loan early. However, customers are exempt from foreclosure charges after paying at least 24 EMIs.
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