A business loan is the most convenient way to meet the financial requirements of your business. You can take the loan for expansion, buying new machinery/equipment, etc.
If you pay the loan before the due date, it’s known as the pre-closure of a loan. By doing this, you can reduce the loan tenure and also the burden of interest.
Banks and other lenders charge a specific fee for loan pre-closure to recover some interest that will be lost in the process.
You can go for full pre-payment or partial pre-payment.
Types of loan pre-payment:
1. Full pre-payment
If you want to pay the whole loan amount before the loan tenure, you can save on the interest.
The rules and procedure of full pre-payment will depend on the lender. So, it is necessary first to know if your lender gives this facility.
2. Partial pre-payment
You can also pay part of the loan amount. This helps in reducing the principal amount, the EMIs, and also the interest.
Check for this service with your lender first.
If there are excess funds with you better way would be to go for pre-payment of the loan to save money on interest.
If you are looking for an unsecured loan for your business, contact Gromor Finance now!