Indians love their two-wheelers! They make for an affordable purchase, are fuel-efficient, allow you to zip past congested city roads and whatnot. Besides, thanks to easy two-wheeler loans, you don’t need to worry about the price.
Although you do need to think about paying your EMIs, or more importantly, prepaying them to close the loan faster.
What is loan prepayment?
Some lenders in India offer borrowers a prepayment feature, meaning they can repay their entire loan amount before its pre-defined tenure. You can prepay your loan for a bike in full or parts depending on your situation.
Loan prepayment is a way to close the loan faster. You also end up paying less overall interest than stipulated.
5 ways to prepay your loan for two-wheelers
Do you want to settle your two-wheeler loan amount? Prepay it by adhering to the following:
Additional Read – Things to Know While Comparing Two-Wheeler Loans
1. Budget monthly expenditures
You don’t have to curb your lifestyle aggressively. Instead, don’t compromise on your needs, but modify your wants.
Slightly modifying your lifestyle will leave you with surplus funds, which you can use to prepay the loan. By doing this, you won’t need to stop saving or break an FD to foreclose your loan early.
2. Consider refinancing
Even a difference of 0.5% to 1% in ROI can make a huge difference if you want to prepay your loan. Therefore, to close your bike loan amount, prepay it faster by refinancing your loan with another lender.
Refinancing means shifting your instalments to another lending institution as they are willing to provide you with a lower two wheeler loan interest rate. A lower ROI means you’ll have significantly less amount payable.
3. Try automated payments
You won’t be tempted to spend extra funds if you have standing instruction to pay EMIs. In fact, specific lenders may also provide you with a small discount for assuring monthly loan repayments.
If you already have a standing instruction in place, try increasing its monthly limit to close the loan quickly.
4. Negotiate a bi-weekly payment model
Consider negotiating a bi-weekly payment model instead of waiting an entire month to pay your EMIs. Paying twice a month can help you finish off your loan quickly. Moreover, accelerated bi-weekly payments will also help combat the compound interest on your loan.
5. Round off monthly payments
Rounding off your odd amounts can make a real difference when it comes to bike loan prepayment. For instance, if your EMI is Rs. 3,500 per month, always pay Rs. 4,000. The extra contribution of Rs. 500 per month compounds to an additional payment of Rs. 6,000 annually.
Additional Read – The Ideal Tenure For Your Two-Wheeler Loan
Use these actionable tips to prepay your loan faster.
Have you already repaid your previous loan for a bike and want another? Choose a lender that offers affordable interest rates at comfortable tenures with a prepayment facility.
Partner with Tata Capital for excellent ROIs, flexible repayment terms and a prepayment facility to help you close your loan faster.
So, if you want to file for a new loan or refinance your current loan, calculate your potential EMIs using our two-wheeler loan EMI calculator, and apply right away!