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What is Loan Prepayment / Foreclosure? — Meaning, Definition & Example
Definition
Prepayment means paying off part or all of a loan before the scheduled tenure. RBI mandates zero prepayment penalty for floating-rate home loans. Prepaying in early years saves maximum interest since interest component is highest then. Part-prepayment can significantly reduce total interest and tenure.
💡 Real Example
On a ₹50L home loan at 8.5%/20 years, prepaying ₹5 lakh in year 3 saves ₹12+ lakh in total interest and reduces tenure by 3+ years.
🇮🇳 Loan Prepayment / Foreclosure in Hindi / हिंदी में
लोन प्रीपेमेंट — प्रीपेमेंट निर्धारित अवधि से पहले लोन का पूर्ण या आंशिक भुगतान है। फ्लोटिंग रेट होम लोन पर प्रीपेमेंट पेनल्टी शून्य है।
Loan Prepayment (Hinglish) — Prepayment matlab loan ka kuch ya poora amount scheduled tenure se pehle pay karna. Floating rate home loan pe zero prepayment penalty hai (RBI rule).
❓ Frequently Asked Questions
What is Loan Prepayment / Foreclosure in simple words?
Prepayment means paying off part or all of a loan before the scheduled tenure. RBI mandates zero prepayment penalty for floating-rate home loans. Prepaying in early years saves maximum interest since interest component is highest then. Part-prepayment can significantly reduce total interest and tenure.
Can you give an example of Loan Prepayment / Foreclosure?
On a ₹50L home loan at 8.5%/20 years, prepaying ₹5 lakh in year 3 saves ₹12+ lakh in total interest and reduces tenure by 3+ years.
What is Loan Prepayment / Foreclosure meaning in Hindi?
In Hindi, Loan Prepayment / Foreclosure is called लोन प्रीपेमेंट. प्रीपेमेंट निर्धारित अवधि से पहले लोन का पूर्ण या आंशिक भुगतान है। फ्लोटिंग रेट होम लोन पर प्रीपेमेंट पेनल्टी शून्य है।