Getting a loan is always a daunting task for people. It involves large amount of paperwork and documentations and is definitely a huge burden on the borrower to make in monthly repayments on time. Be it car loan, home or gold loan they all include long procedures of completion before you get the credit. But such is not the case for personal loans. Anyone can apply for personal loans whenever they want which is usually disbursed within a few days and is thus a hugely popular scheme when people as in emergency. The best part about personal loans is that one does not need to keep any collaterals as security in possession of the money lender and one doesn’t even need to bring in a guarantor. But it does have a down side. The interest rates for personal loan is much higher than any other loans available. Thus people tend to want to pay off the loans at an earlier tenure as it would mean spending lesser money on interest. This often involves loan prepayment either partial or full.
Hence it becomes very important that when opts to take a personal loan it should come with the option of prepayment or foreclosure of loan. If this is not available it may involve a larger repayment amount going out of your pockets. Any personal loan generally has a lock down of about one year after which one can opt to prepay the loan amount in full. Personal loans are also not tax exempted like other loans and thus one always wants to repay the loan as soon as possible as longer tenures equates larger repayment amount due to steep interest rates. Sometimes it may even happen that the borrower gets possession of a certain amount of money as increment in salary or bonus or profits. In such a case too one would like to do away with the burden of the loan and make prepayments. Many lenders tend to opt for additional charges for loan foreclosure or prepayments especially for those personal loans which have been taken on the basis of fixed interest rate. Such extra charges are generally levied in case of loans which have been taken on the basis of floating interest rate. Thus one should go through all the terms and conditions properly before finalizing a personal loan. Also prepayment of loan is always good in keeping up of a good credit record.