Partial Payment or Extra EMI

POSTED BY Vinayak C ON May 30, 2011 12:35 pm COMMENTS (3)

Hi Manish & All,
 
I am an existing home loan customer of IDBI bank. I have taken loan of Rs 1400000/- @ interest rate 11.25% in 2007. I paid my first EMI on 10th Jul 2007.
EMI – 14023/- for 20 yrs
 
I did some part payment (around 200000/-). Now the Tenure is 12 yrs and the outstanding loan amount is around 1100000/- @ interest rate 10.75%.

Now i think i can pay 10000/- as an extra EMI & My question here is – What is more beneficial, Part payment or an Extra EMI. 

Please advise.
 
Thanks !
Vinayak

3 replies on this article “Partial Payment or Extra EMI”

  1. Vinayak C says:

    Thanks for the advice Ashal. This will surely help me in taking the right decision.

    Others, Do you think same as Ashal?

  2. ashal jauhari says:

    Dear Vinayak, Here I assume you do have a sufficient contingency fund. If you do have some lump sum amount, use it to prepay right now. In case you don’t have lump sum amount & want to prepay over the period, increasing the regular EMI ‘ll be a better option. In this case the increased EMI ‘ll reduce your principal very fast month after month.

    My sincere advice ‘ll be to create an emergency fund first if not there with you already.

    Thanks

    Ashal

  3. Jayaprasad says:

    Anything extra amount paid other than EMI is considered as partial pre-payment unless your loan plan allows this frequent pre-payments.

    Otherwise, there would be some penalty for each partial prepyaments.

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