If a take 10 lac loan but can i pay the amount early after 2years and how is the interest be count???

realanubhav

KF Rookie
Whether you can prepay a loan after 2 years and how the interest would be calculated depends on several factors, including:
1. Loan Agreement:
  • The loan agreement typically outlines prepayment terms, including any penalties or fees associated with early repayment. Some loans have no prepayment penalties, while others may charge a percentage of the remaining loan amount.
2. Loan Type:
  • Different loan types may have different prepayment rules. For example, some mortgages may have prepayment penalties for the first few years of the loan.
3. Lender:
  • Each lender has its own policies regarding prepayment. Be sure to check the specific terms of your loan agreement or contact your lender directly to find out more about their prepayment policies.
Assuming there are no prepayment penalties, the interest on your loan would be calculated based on the Rule of 78:
  • This method allocates more of the early payments to interest and less to principal. As you make more payments, the portion applied to interest decreases, and the portion applied to principal increases.
Here's an example:
  • You take a 10-lac loan at an annual interest rate of 10% for a term of 5 years.
  • After 2 years, you decide to prepay the remaining loan amount.
  • Using the Rule of 78, the lender would calculate the interest you owe based on the remaining loan amount and the number of payments remaining in the original loan term (3 years in this case).
It's important to note that this is just a simplified example. The actual calculation of your interest would be more complex and depend on the specific terms of your loan agreement.
Here are some additional things to keep in mind:
  • Even if there are no prepayment penalties, there may be other costs associated with early repayment, such as processing fees.
  • Prepaying your loan can save you money on interest overall, but it's important to weigh the pros and cons before making a decision.
  • You can use online calculators or consult with a financial advisor to estimate the potential savings from prepaying your loan.
I hope this information helps!
 

ShavirB

Founder
Staff member
If a take 10 lac loan but can i pay the amount early after 2years and how is the interest be count???
Yes you can do that provided you don't have a pre payment penalty clause in your agreement. The interest will be counted only for the time you had the Loan
 

shyaranakyu

KF Rookie
If a take 10 lac loan but can i pay the amount early after 2years and how is the interest be count???
Just do these simple things

1. Check the pre payment clause, either online using internet banking or by visiting the branch or by contacting the branch representative on phone.

2. Prepayment clause will determine the specific amount of interest required to be paid after every particular time. For two years , it can be checked online or by visiting the branch or on phone.

3. Pay the amount post checking the clause and live free of interest and free of loan.

Hope it helps
 

Ria

KF Ace
If a take 10 lac loan but can i pay the amount early after 2years and how is the interest be count???
Yes provided no higher amount of penalty due to prepayment. If you're able to save 5-6 lacs by payment of 1 lakh penalty then i must say go for it and also it won't impact your CIBIL score
 

Funding funda

KF Rookie
If a take 10 lac loan but can i pay the amount early after 2years and how is the interest be count???
For early payment of loans or pre maturity payment of loans other than construction purpose you have to pay foreclosure charges. After 12 months such charges is approx 3% Plus GST 18% and you will not be liable to pay interest for remaining term. Just apply for foreclosure and pay the amount as calculated.
 
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