A Complete Guide To Personal Loan With Part Payment Option

Every individual in some time of their life is in need of immediate financial assistance. Personal loans at such times can not only help them meet their needs but also prevent borrowing from their friends/family.However, over time, people want to free themselves from the loan and pay it in full or partly. Although most of the banks allow applying for a personal loan with part-payment option, there is a set of requirements for individuals who want to apply.

When you have an additional amount in hand, which is not sufficient to repay the total outstanding amount, you can choose to partly pay the personal loan . Personal loan with part-payment option allows part payments which are deducted from the principal amount. Unlike pre-payment, where payments are made to finish the loan before the specified period, part payment is smaller amounts that are over and above the regular EMIs.

In a scenario where X takes a personal loan with part-payment option of ₹3 lakhs for 5 years at an interest rate of 15 per cent, the total interest amount comes down to ₹1,28,219. Now, if X decides to make even a part-payment of ₹50,000, he will be able to save 32 per cent on interest cost after the 6th EMI.

Even if part-payment made to the loan amount is not sufficient to finish a loan, there are various advantages associated with a personal loan with part-payment option, as stated below:

• Savings on interest cost: As mentioned above, making a part-payment option to your personal loan can help in saving thousands on interest cost. This is because any payment made aside from the pre-decided monthly installment is directly deducted from the principal amount.
• Payments can be made multiple times: This is another advantage of a personal loan with part payment option. The payment made as part payment towards a personal loan need not be just once but more than once basis the bank guidelines. In fact, it can be even a regular payment or a lump-sum amount. Although there are charges for each payment, the savings on interest cost is more.

Interest cost is the revenue for banks and financial institutions for the service of rendering the amount as a loan to the borrower. Hence, any step towards reducing the interest cost levies a charge, in this case, called a part-payment fee. The banks generally charge a percentage of the repaid amount or a percentage of the principal amount as the penalty to compensate the lost profit.It is ideal to read the offer documents of your personal loan to understand the part-payment guidelines of your respective financial institution.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.