Can I prepay or repay my two-wheeler loan with a low EMI early?

Yes, most financial institutions allow applicants to prepay or foreclose two-wheeler loans ahead of schedule. However, your two-wheeler loan should have a low Equated Monthly Instalment (EMI) and flexible repayment structure for easier prepayment. Here are some tips for prepaying two-wheeler loans:

• Read Loan Terms: Your loan agreement will have details of foreclosure charges and process. Loan providers allow prepayment after paying applicable charges.
• Understand Prepayment Penalty: Some financial institutions may charge 1-5% of principal outstanding as a penalty. The foreclosure process is easier if your loan has minimal or no prepayment charges.
• Complete Part Prepayments: Making part prepayments yearly allows you to reduce the principal outstanding, lowering your interest outgo and future EMIs. Check if any part payment charges apply.
• Foreclose with Savings: Use your annual bonuses or any other accumulated savings to foreclose the two-wheeler loan. Make a lump sum payment and request loan closure.
• Complete Loan Tenure: Some loan providers may not apply prepayment charges if you foreclose after completing half the loan tenure. Check with your loan provider whether you can foreclose penalty-free at this stage.
• Check Your Credit Score: Foreclosing a loan will also help your credit score. Just ensure there are no repayment delays or defaults before you foreclose.