When taking any loan, it is important to know the exact details of your loan repayment schedule. This is a process by which you make payments every month until the principal amount and interest are fully paid. Paying off your loan as per the schedule ensures that you make timely payments, and do not end up paying more interest and late fees.
Loan repayment schedule
To ease the burden of payment, your loan amount is divided into equated monthly instalments (EMIs), which get deducted from your bank account. The number of months for repayment depends on the tenure of the loan. A loan repayment schedule is basically a timetable which communicates the exact details of your loan repayment plan. It helps you plan your cash flows and make payments on time.
The details of every loan is unique. However, the key factors remain the same. For instance, suppose you take a loan of ₹8,00,000 at 12% for 3 years. The EMI value is ₹26,571, the tenure is 36 months and the payment date is the 5th of each month. In this case, ₹26,571 will be deducted from your Savings Account on the 5th of each month for 36 months.
The loan schedule will also mention some other components, which go into the design of the final loan repayment schedule. Knowing these early on can help you plan your loan repayment without putting stress on your finances.
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1. Complete loan details
Your loan repayment schedule document will feature key details of the loan. These include important components such as the total loan amount comprising the principal and interest to be paid, the tenure of the loan, and the exact rate of interest.
2. Payment frequency
The schedule will clearly state the frequency of EMI payments, typically monthly for a fixed number of years. In unique cases, the frequency may differ.
3. EMI value
This document includes the exact value of the EMI to be paid every month. When agreeing on the loan terms and conditions, you can make use of an EMI Calculator to arrive at a value that aligns with your monthly cash flows.
4. Extra payments
As a borrower, you are allowed to make extra payments when you have access to excess funds in your bank account. These extra payments are also factored into the schedule, to enable you to pay off the loan faster and reduce the cost of the loan.
5. Principal EMI amount
Your loan repayment schedule also mentions the principal component in every EMI. Even though the EMI value remains the same, you will observe that the principal amount per month increases.
6. Interest component
Every EMI comprises an interest component, which is mentioned in your loan repayment schedule for every payment. The value of the interest component decreases as the tenure progresses.
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7. Outstanding amount
The outstanding amount for every EMI payment is mentioned in the loan repayment schedule. As you make loan repayments, the value of the outstanding amount keeps decreasing.
Quick tips
- Stick to the loan repayment schedule to avoid paying more interest and late fees.
- Ensure that there are adequate funds in your Savings Account so that the EMI can be deducted each month.
- Channel funds towards extra payments to help expedite the loan repayment process.
The takeaway
If you plan to take a Personal Loan, it is important to check your loan repayment schedule and pay it off on time. Axis Bank offers competitively priced Personal Loans with repayment tenures of up to 60 months.
The interest rate starts at 10.49% p.a., and you can borrow amounts ranging from ₹50,000 to ₹40 lakh. Take advantage of a seamless online application process, and quick approvals and disbursal. Remember, when you repay your loan on schedule, you can build a positive credit history, which makes you eligible for superior loan products.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
