Should you pay off your personal loan early? Pros, cons and smart tips | Mint

Consideration of a personal loan prepayment is an important financial consideration that has pros and cons. Prepaying a personal loan can accelerate your financial freedom and may save you money when done properly. However, understanding all implications is necessary to help you determine if it is the right decision for you.

What is loan prepayment?

Prepayment is the process of paying the entire outstanding balance on your loan early, before the end of your scheduled loan term. In prepayment, the entire loan is settled and your EMI obligations are ended immediately.

In conclusion, a prepayment in a personal loan can save cash if it aligns with your overall budget. If you still have a fair amount in an emergency fund and the savings are beyond damaging the penalties, you can make the prepayment. If you want to keep cash flow or pursue high-interest or high return action then just keep the cash.

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