Personal Loan Prepayment: How Much Do Early Foreclosures Really Save You?
Renjith Pillai
Senior Systems Architect & Financial Analyst
Personal loans carry some of the highest interest rates among retail bank products (10.5% to 24% p.a.). Because bank EMIs use front-loaded interest amortization, prepaying a personal loan early in its tenure yields massive interest savings.
Front-Loaded Amortization: Why Early Prepayment Matters
In the first 12 to 24 months of a 5-year personal loan, up to 60% of your monthly EMI goes toward clearing interest charges rather than principal repayment. Making a partial lump-sum prepayment during Year 1 directly reduces the outstanding principal, cutting interest compounding for the remaining 4 years.
Frequently Asked Questions
Do Indian banks charge foreclosure fees on personal loans?+
Is it better to reduce EMI amount or loan tenure after prepayment?+
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Senior Software Engineer & Network Specialist
Renjith Pillai is a senior software engineer and financial tools author with over 12 years of experience. He built EasyCalcs.in to provide high-precision, privacy-first technical tools and financial calculators for investors, engineers, and consumers.