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The trail of life is extremely uncertain and goes through a plethora of ups and downs like a roller coaster. There are situations where one needs extra money to counter the arising issues. The first thing that crosses our minds in such a scenario is opting for a loan that comes with minimal documentation, is disbursed quickly, and is unsecured.
This is where personal loans come into the picture. These loans are easily available at minimal documentation and can be used for a wide variety of situations. The repayment tenor of personal loans in UAE is flexible which turns out to be an add-on behind the popularity of this financial service. Very often, debtors tend to opt for a personal loan early settlement in order to get rid of outstanding debts as early as possible.
Most of the people opting for personal loan early settlement are unaware of the pros and cons of the feature. In most cases, you will have to pay an early settlement fee for the pre-payment of the loan. Furthermore, the payable amount along with the early settlement fee would depend on the type of interest rate the debtor would have opted for.
In order to provide you with a clear understanding of the pros and cons associated with personal loan early settlement, we’ve come up with a new blog. In this thread, we will dive deep into the nuances of early payment and its repercussions.
As the name suggests, a personal loan early settlement fee is the financial burden that a customer will have to bear in case they choose to opt for settling the loan before the proposed period. The primary reason for charging a personal loan early settlement fee is that when a debtor pays the entire amount in one go the financial institution does not get the right interest amount scheduled in case of timely payment.
The personal loan early settlement fee and guidelines of payment vary from provider to provider. Therefore, it is recommended that you read the fine print of the personal loan carefully before opting for early settlement. This way you would have a clear idea about the fees, charges, and interest rate associated with the debt.
A common question asked by a lot of debtors is that should I opt for the feature? Is it actually worth it? Should I make the repayment in time?
The answer to these questions is rather simple; first, you need to figure out the early settlement fees and guidelines. If your financial institution does not charge any early settlement fee, go for it without thinking twice. However, if your bank charges an early settlement fee then you need to calculate the extra amount you will have to pay to get rid of the outstanding debt.
Another approach to counter this issue is by calculating the amount you would end up saving by making an early settlement. The calculation can be done by simply adding the total interest along with any extra fee applicable to the loan. The final value would be the amount that you’d end up saving if you opt for early settlement of your personal loan. If the figure obtained at the end of the calculation is negative it denotes that you are bearing loss instead of saving money. Contrary to this, if the obtained figure turns out to be positive it is clearly evident that you are saving money.
Here’s a quick rundown on the pros and cons of the personal loan early settlement-
Personal loan early settlement will help you to become debt-free and improve your credit score. At the same time, this approach will also help you to manage your expenses and make ensure that you do not end up ruining your credit score. Personal loan early settlement is a great feature to manage outstanding debts, analyze, assess and implement if it helps you to save money!