Loan EMI: Want to repay the loan on time, keep these things in mind, there will be no problem

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Loan EMI: It is like a dream to buy a house or a car by saving your money in rising inflation. In such a situation, the bank helps you. Today most people buy a house or a car by taking loan from the bank. Apart from this, many times we take loan from the bank for our personal work.

Banks are easily providing personal loans to people at very low interest rates. Apart from this, now many types of loans are being given by banks which can help you in different works. However, many times we try to settle the loan quickly by prepayment.

If you are also planning to settle the loan quickly by prepayment, then you must keep some things in mind. This will help you avoid future problems.

Many times, for pre-payment of loan, you are charged a penalty by the bank or financial institution. Now the question arises that why does the bank impose penalty for withdrawing the money. The answer is that the bank gives you money for a fixed limit and earns profit from the interest on it. In such a situation, seeing his profit decreasing, he imposes penalty.

Many times the penalty imposed by the bank is so high that it is not advisable to make prepayment. Besides this, making a big payment once also affects your liquidity. That means there may be shortage of funds during emergency.

Before making prepayment of the loan, you also need to think about your income tax. You can get a rebate of up to Rs 1.5 lakh on the home loan amount under Section 80C of Income Tax. Also, exemption of up to Rs 2 lakh is available on the interest amount. You suffer losses due to pre-payment.

While pre-paying the loan, always keep in mind that even after paying the money, you still have enough money left. According to RBI rules, if the interest rate of the loan is floating then the bank cannot impose penalty on prepayment.

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