What is Partial Part Payment & Prepayment Personal Loan? Meaning & Examples
  • Personal
  • Business
  • Corporate
  • Private Banking
  • Privy League
  • NRI Services
  • Investors
  • Personal
  • Business
  • Corporate
  • Private Banking
  • Privy League
  • NRI Services
  • Investors

Taking a Personal Loan can sometimes feel like navigating a long, winding road. The end goal? To be debt-free! But one aspect that often puzzles borrowers is the decision around prepayment and partial payments. This blog will discuss these options at length to help you decide if they are right for you.

Understanding Prepayment in Personal Loans

Let's say you've taken a Personal Loan for a sudden home renovation or an unexpected travel plan at high Personal Loan interest rates. Fast forward a few months, and you find yourself in a comfortable financial position, maybe due to a bonus or an increment. Here's where prepayment comes into play. Prepayment means paying off your loan in full before the tenure ends.

  • Reduced Interest Payout: The most compelling benefit is the significant reduction in the total interest you pay. The sooner you pay off your loan, the less interest you accrue.
  • Debt-free Sooner: It's a liberating feeling to be debt-free. Prepaying your loan lifts that financial obligation off your shoulders ahead of schedule.
  • Improved Credit Score: Regular repayments already boost your credit score, but paying off a loan in full can give it an extra push, enhancing your creditworthiness.

Partial Payment: What is Part Payment in Loan?

Let's say you have a Personal Loan but can't pay it off in full just yet. Here's where a Personal Loan part payment or partial payment steps in. It's like a middle ground where you make a significant payment towards your loan balance, but not in its entirety.

  • Decrease Loan Tenure or EMI: You can choose to either shorten your loan tenure or reduce the monthly EMI, depending on your lender's terms. This flexibility is a lifesaver for many.
  • Manageable Debt: Chipping away a large chunk of your loan reduces the mental burden of a long-term debt hanging over your head.

Can We Pay Personal Loan in Advance?

Absolutely, paying your Personal Loan in advance is considered a financially smart move.

  • It gives you freedom from debt: The psychological benefit of being debt-free cannot be overstated. It's an enormous relief and a boost to your financial freedom.
  • You save considerably on interest costs: The earlier you pay, the more you save on the accruing interest, keeping more money in your pocket in the long run.

How to Pay Extra EMI for a Personal Loan?

Paying an extra EMI isn't as complex as it may sound. Here's a simple breakdown of how you can make the payment in a few simple steps:

  1. Check with Your Lender: First, confirm if your lender allows extra EMI payments and understand their terms.
  2. Calculate the Impact: Use a Personal Loan EMI Calculator to understand how paying an extra EMI affects your loan tenure and interest.
  3. Plan Your Finances: Ensure that paying extra doesn't strain your other financial commitments.
  4. Visit the Website or App: If your lender provides an app or website to make payments, you can use the same portal to find the option for 'prepayment' right there.

Leveraging Tools and Calculators

Empower yourself with tools like the Personal Loan EMI Calculator. It helps you see the tangible impact of prepayments on your loan tenure and interest expense.

Understanding the Fees and Charges

Be mindful of Personal Loan fees and charges that might apply for prepayment or part payment. Sometimes, the charges might outweigh the benefits, so do your math right.

Documentation: Keeping It in Check

Ensure your Personal Loan documents reflect the required changes – the updated loan amount after your partial payment or prepayment.

Eligibility Criteria

Stay updated about your Personal Loan eligibility, especially if you plan to take another loan soon. Depending on the case, prepayments and partial payments can impact your eligibility.


Opting for prepayment or partial payments in Personal Loans is like finding a hidden shortcut in a maze. It not only saves you money but also brings peace of mind. It's about being proactive with your finances and making informed decisions that align with your financial health. So, the next time you consider taking a Personal Loan, keep these points in mind and proceed confidently.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.