Loan Prepayment

Prepayment means paying extra money toward your loan on top of your regular EMI (monthly installment), which goes directly toward reducing what you still owe (the principal). Because interest is charged on your remaining balance, even small extra payments each month can significantly cut down the total interest you pay and shorten how long it takes to become debt-free. On top of a recurring monthly extra, you can add any number of one-time extra payments whenever your finances allow it — a bonus, a windfall, or just a good month — each with its own amount and timing. Paying extra earlier always saves more interest than the same amount paid later, since it has more months left to stop compounding against you. All rates here are reducing-balance (diminishing) rates — interest is charged each month only on what you still owe, which is how banks quote home, car and personal loans. If a dealer or lender quotes a "flat rate", it is NOT the same thing and is usually much more expensive than it looks — use the Flat vs Reducing Rate converter to compare.