If you are considering an option to pay off the personal loan before the repayment tenure, there are quite a few things that you need to consider. While the feeling of financial stability upon prepayment might be tempting enough to consider, never proceed with the same unless the following aspects are taken care of:

• Type of Personal Loan

If you check personal loan eligibility and eligible to apply for a loan after, the thought of prepayment should focus on the interest rates, penalties on overdue payments, and foreclosure charges, if any. For instance, it is always advisable to pay off a revolving loan like a credit card to ensure debt riddance, as quickly as possible.

• Prepayment Caveats

If your lender is known to levy heft foreclosure charges, it isn’t advisable to prepay the loan early, and that too if you are nearing the end of the tenure. However, if you have taken a long-term loan and prepayment with foreclosing penalties is more financially viable than the accumulating interests, consider paying off the loan at the earliest.

• Payment Methods

Now that you have made up your mind about paying early consider the best method to go about the process. In most cases, individuals consider debt consolidation where they get rid of the highest interest loan with a more affordable credit line. 

However, before you can even consider an early payment, it is necessary to accumulate the documents required for a personal loan to get a better clarity into the process. 

Regardless of the approach, prepaying strategically can also improve your credit score, in the long run. 

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