What is Pre-Payment and Part Payment in Loans ?
27 May, 2024
Synopsis
Pre-payment and part payment of loan are two options provided by banks.
A pre-payment allows you to foreclose the loan completely before the designated tenure.
A part payment allows you to pay off a partial amount of your loan.r
If you already have a loan, or about to take one on, then you should be fully aware of all the options for repayment that are available to you. While most lenders allow you to repay the loan via Equated Monthly Instalments, there are ways to become debt-free faster. Pre-payment and part payment are loan repayment strategies you can employ to either pay off your debts earlier than scheduled or to reduce your loan’s outstanding balance. These techniques help save interest costs and contribute to improving your financial health. If you are interested in exploring these methods to pay off your debt, you can do so on Payzapp from HDFC Bank easily.
What is Pre-Payment?
Pre-payment involves paying off a debt, such as a loan or mortgage, before the scheduled payment period. Essentially, it means clearing the outstanding loan amount in full before the loan tenure concludes. This can be achieved either through a lump sum payment or through periodic additional payments apart from the regular Equated Monthly Instalments (EMIs).
Advantages of Prepayment
Following are some advantages of prepayment:
Interest Savings: By pre-paying a loan, you can significantly reduce the interest you would otherwise pay over the entire original loan tenure. This is because the outstanding principal amount reduces with prepayment, resulting in lower interest charges.
Reduces Your Liability: Pre-payment allows you to become debt-free sooner, freeing up your finances for other investments or expenses.
Improved Credit Score: Clearing off debts earlier than scheduled also impacts your credit score positively, showcasing responsible financial behaviour to lenders.
What Is Part Payment?
Part payment, on the other hand, involves making a substantial payment towards the outstanding loan amount as and when you have the resources to do so. Unlike pre-payment, part payment does not fully settle the loan but reduces the principal amount owed. You can choose to make periodic part payments along with your regular EMIs.
Benefits of Part Payment
Following are some key benefits of opting for part payment:
Reduced Interest Burden: Like pre-payment, part payment helps in lowering the total interest paid over the loan tenure by reducing the principal amount.
Shorter Loan Tenure: By reducing the outstanding balance, you can potentially shorten the duration of your loan, which absolves you of your debt at a quicker rate.
Flexibility: Part payment offers you flexibility in managing your finances. You can choose to make lump sum payments whenever you have surplus funds without committing to clearing the entire loan at once.
How PayZapp Facilitates Pre-Payment and Part Payment
PayZapp offers a seamless platform for you to execute pre-payment and part payment transactions conveniently. Here’s how it simplifies the loan repayment process:
Easy Integration with Bank Accounts
PayZapp integrates effortlessly with your HDFC Bank and other bank accounts, allowing you to initiate pre-payment and part payment transactions directly from your linked account.
Secure Transactions
With robust security measures in place, PayZapp ensures that all transactions, including pre-payment and part payment, are secure and encrypted, safeguarding your financial data.
User-Friendly Interface
PayZapp boasts a user-friendly interface that makes it easy for you to navigate through the app and execute transactions with just a few taps.
Real-Time Updates
You receive real-time updates and notifications regarding your loan payment transactions through the PayZapp app, providing you with complete transparency and control over your finances.
Integration with Lenders
PayZapp collaborates with various lending institutions, enabling you to directly initiate loan repayment transactions without the need for separate logins or interfaces.
How to Initiate Partial Loan Payments or Pre-Payments Via PayZapp
Follow the steps mentioned below to make partial payments or pre-payments for your loans:
Login to PayZapp Online Payment App with your thumb or finger impression
Go to ‘Bills and Recharges’ on the homepage, select ‘Financial Services’ and click on ‘Loan.’
Select your loan provider from the list and enter your loan account number.
On the next page you will be able to view your loan details.
Choose between pre-payment or part payment and select your preferred payment mode to complete the transaction.
Click here to make upi payment through PayZapp on your IOS phone.
Click here to download PayZapp UPI Payment App on your Android phone.
Become Debt-Free Sooner – Choose PayZapp for Pre And/Or Part Payments
Pre-payment and part payment are effective strategies for managing debts and achieving financial freedom sooner. Whether it is clearing off a loan entirely or reducing the outstanding balance, these techniques offer numerous benefits, including interest savings and shorter loan tenures. With the emergence of digital payment solutions like PayZapp, executing pre-payment and part payment transactions has become more convenient and secure than ever before. By leveraging the features offered by PayZapp, you can take control of your finances and work towards a debt-free future with confidence and ease.
Reduce your loan liabilities quickly. Download PayZapp now to pay your EMIs effortlessly.
*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
