Personal loans offer quick financial relief, but the longer the tenure, the heavier the interest burden. Closing your loan early not only saves money but also brings financial freedom faster. Here are five smart tips to repay your personal loan ahead of time and reduce your interest cost significantly.


1. Use Extra Income to Pay Off the Principal

  • Direct bonuses, incentives, tax refunds, or savings towards your loan principal.
  • Reducing the principal early lowers future interest calculations.
  • Even small lump-sum payments can shorten tenure by months or years.


2. Gradually Increase Your EMI Payments

  • Whenever your income rises, increase your EMI amount.
  • A small EMI hike can lead to big savings in interest over time.
  • Use EMI calculators to estimate potential savings from increased payments.


3. Never Skip or Delay EMI Payments

  • Missing EMIs attracts penalties, impacts your credit score, and extends loan tenure.
  • Set up auto-debit or reminders to ensure timely payments.
  • Consistency in repayments keeps interest costs under control and boosts creditworthiness.


4. Opt for Prepayment When Possible

  • If your lender allows, make lump-sum prepayments to close the loan early.
  • Check for prepayment charges before proceeding.
  • Strategic prepayments can cut down years of interest liability.


5. Focus on High-Interest Loans First

  • If you have multiple loans, repay the ones with the highest interest rate first.
  • The avalanche method helps reduce overall financial burden quickly.
  • Prioritizing high-cost loans ensures maximum savings.


Why Closing Early is a Game-Changer

  • Lower Interest Costs: You save thousands over time.
  • Better Cash Flow: More disposable income every month.
  • Financial Freedom: Less debt = less stress.
  • Improved Credit Score: Timely repayment boosts credibility for future loans.


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G GOWTHAM

26/08/2025 05:06 AM