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Can I Pay EMI in Advance? Know how to close loan early & its benefits
- Published on: 16 May 2024
Often, people wonder, ‘Can I pay EMI in advance?’ so that they can close their loans early and become debt-free sooner. This is a great way to utilise your additional funds by paying more than your EMI amount. This strategy is ideal for long-term saving, helping you manage your budget efficiently.
Most lenders have an option for online advance payment, which you can opt for at your convenience. However, it is important that you understand what are the requirements to pay your EMI in advance and its benefits.
Read on to know how to pay EMI in advance, its benefits and more.
When you take a loan, lenders decide on a fixed instalment amount based on your repayment capacity and other factors. You need to pay this amount on a designated date each month for the chosen tenure.
If you make a payment before the date or more than the decided amount, it counts as an advance EMI payment. For example, say you pay a home loan EMI of ₹15,000 on the 5th of the month. Now, if you make a payment on the 3rd of the month, this is an advance payment towards your home loan.
Also called standard EMI, arrear is a type of EMI payment where the lender doesn’t deduct the first EMI from the loan amount. This type of EMI is ideal for borrowers without having sufficient funds to make a down payment. Thus, lenders disburse the entire loan amount after deducting only the processing fee.
In contrast, advance payment is when the lender deducts the first EMI, along with a processing fee, before disbursement. The benefit of this is that it lowers your principal loan amount. Consequently, your EMI and interest also decrease.
To better understand, here are the key differences between advance and arrear EMI payments.
| Particulars | Advance EMI | Arrear EMI |
|---|---|---|
| Timing | Beginning of the month | End of the month |
| Interest paid | Comparatively lower | Slightly higher due to the higher disbursed amount |
| EMI amount | Lower | Higher |
| Suitable | Ideal for borrowers with sufficient funds | Suitable for borrowers with higher fund requirements |
Also Read: Online Loan Payment
Here are some of the advantages you can enjoy with advance EMI payment.
To pay your EMI in advance, you can opt between the lender’s web or mobile portal. Here are the steps you can follow.
If you make a payment with the steps before the due date, it counts as an advance EMI. Note that this is a general overview, and the specific steps may vary depending on the lender.
Following the steps mentioned above, you can pay your EMI amount in advance and reduce your financial liabilities. Another way to achieve financial freedom is by consolidating all your loans and credit card bills with a debt consolidation loan. This option also helps you save on paying high interest on the borrowed amount.
For this, you can opt for the Fibe Instant Loan, which has no use restrictions, alternative credit access, and competitive interest rates. You can enjoy a loan amount of up to ₹5 lakhs with swift dispersal and repay with a comfortable tenure that fits your budget. Download our Personal Loan App or apply on our website now.
Of course! There is no harm in paying your EMIs in advance. Contrastingly, it helps you enhance your positive credit history, boost your credit score and avoid the risk of defaults.
Paying your EMIs before the due date is good for credit. This is because when you miss an EMI, your credit score drops. With advance EMI payment, you eliminate the possibility of missing the date, which is why it’s a smart idea for maintaining good financial health.
Yes! And it’s called pre-closing the loan account. For this, you need to contact your lender and make a one-time payment for your complete loan amount plus interest. So, if you have a question, ‘Can I pay EMI in advance all at once?’ then you need to go in for a loan pre-closure.
