Personal Loan Part-Prepayment

A Brief Guide to Personal Loan Part-Prepayment

June 29, 2022 • 16702 views

Personal loans are easy to get nowadays due to their minimum documentation requirement and quick disbursals. These are collateral-free loans and have no restrictions in terms of usage. Hence, they can be used to fund expenses like education, marriage, travel, home renovations, or even for debt consolidation. But after all, a loan is a liability, and everyone wishes to repay it as soon as possible to get freedom from the financial burden of EMIs. Prepayment could help save interest and lower the EMI obligation.

Personal loan prepayment calculator in India is not much promoted as banks hardly advise borrowers to close their loans early; they tend to lose profits due to interests.

It might seem difficult to pay back your loan before its actual tenor. But a Personal Loan foreclosure calculator can help you plan the prepayment of your loan.

Poonawalla Fincorp offers two ways to plan your Personal Loan foreclosure. You can either pay back the entire remaining amount or prepay it in parts.
Let’s check the options to prepay your Personal Loan partly.

Use Disposable Income to Prepay Personal Loan

While availing of any loan, the borrower keeps the EMI below their overall financial repayment ability. Yet, after a few years of taking the loan, the borrower’s income may increase due to factors like salary hikes or bonuses. Therefore, the borrower may use this income to repay the Personal Loan in such scenarios.

The borrower needs to submit all relevant income documents to the bank and request to lower the loan tenor to increase the EMI burden. This helps borrowers save a considerable amount in interest. Another possibility is collecting surplus money to occasionally create a corpus to prepay Personal Loans. Although banks may offer you the opportunity to lower the loan repayment term or reduce the EMI under loan prepayment, it's your call to choose the best option considering your income stability and financial comfort. Use a Personal Loan EMI calculator with prepayment to get the best choice for your loan prepayment.

Use Windfall Gain to Prepay Personal Loan

Borrowers may get windfall gains in their income due to factors like bonuses from the employer, wealth from inheritance, etc. If you get such a chance, it's always advised to use it to prepay your loan.

Before prepaying the Personal Loan with windfall gain, always check whether it's better to prepay the Personal Loan or invest the surplus amount. If the return on investment seems considerably higher than the interest on the Personal Loan, you can choose to invest. And to analyze the Personal Loan prepayment, you can always choose a suitable Personal Loan prepayment calculator in India.

Both options carry some benefits and risks; it’s up to you what to choose.

Let's take an example. Suppose you receive a windfall income of Rs 5 lakh. Your Personal Loan interest is 6.5% per annum. At the same time, interest on the bank fixed deposit is 7% p.a. Supposing you fall in the 20% tax bracket, the actual return on investment would be around 5.6% per annum which is lower than the interest applicable on the Personal Loan. So, you can save more money with the loan prepayment. Alternatively, you may choose to invest, get a better ROI, and then pay off the loan later with a lumpsum savings amount.

How to Decide When to Prepay Personal Loan?

In India, a Personal Loan prepayment calculator could come handy when you are confused with loan prepayment. But what is a Personal Loan preclosure calculator? It is a Personal Loan EMI calculator with prepayment details that helps you identify the positive impact of early repayment of your loan. It is easy to use and will need basic details like the loan amount, tenor, ROI, and the amount you want to repay.

Paying off liabilities as early as possible is something that everyone wishes. However, you should always check the penalty for pre-payment levied by your lender and then decide what’s best. You can find out the risks and benefits by using a Personal Loan preclosure calculator with us or can contact us to know more.


Borrowers are constantly anxious about loan repayment. However, they can always prepay their loan. This is possible during certain situations, such as receiving a raise, promotions, etc. during the loan term, which can increase your pay scale and make it possible for you to prepay the loan. You can determine how much you repay while considering any prepayment penalties with the use of the Personal Loan prepayment calculator.


We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Personal Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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