Neha Nagar Instagram – Don’t pay off your loan without reading this.
Thinking about paying off a loan early? Pause for a moment! Let me break it down for you.
Lots of folks take out long-term loans to make their monthly payments smaller, hoping to pay off the loan when they have more money. But here’s the thing – banks aren’t going to make it easy!
Imagine this: you borrowed ₹10 lakh for a car, paying 9% interest over 7 years. Your monthly payment is ₹16,089.
Now, let’s say you decide to pay it off after just 4 years. The total you’d have to pay? A whopping ₹12,78,229!
Here’s the breakdown: ₹7,72,272 for your 4 years of payments (₹16,089 * 48), plus ₹5,05,957 for the rest of the loan.
But here’s the kicker: If you had taken a 4-year loan from the start, you’d only have to pay ₹11,94,480. That’s a big difference of ₹84,749, plus you’d have to pay extra charges for closing the loan early, adding up to almost ₹1 lakh in losses!
Why is there such a big difference? Because in the beginning, most of your payments go towards paying interest, making sure the bank doesn’t lose out if you pay early.
So, when you’re taking out a loan, make sure you choose a term that you can handle without getting stuck with extra costs later on.
[ NehaNagar MoneyTips LoanAdvice WatchOutForInterest Finance] | Posted on 05/May/2024 21:08:58
