Advance EMI Payments: How to Close Your Loan Early and Save Big

Often, people wonder, ‘Can I pay EMI in advance?’ so that they can close their loans early and become debt-free sooner. This is a great way to utilise your additional funds by paying more than your EMI amount. This strategy is ideal for long-term saving, helping you manage your budget efficiently. 

Most lenders have an option for online advance payment, which you can opt for at your convenience. However, it is important that you understand what are the requirements to pay your EMI in advance and its benefits. 

Read on to know how to pay EMI in advance, its benefits and more. 

What is an Advance EMI Payment? 

When you take a loan, lenders decide on a fixed instalment amount based on your repayment capacity and other factors. You need to pay this amount on a designated date each month for the chosen tenure. 

If you make a payment before the date or more than the decided amount, it counts as an advance EMI payment. For example, say you pay a home loan EMI of ₹15,000 on the 5th of the month. Now, if you make a payment on the 3rd of the month, this is an advance payment towards your home loan.

Difference Between Advance and Arrear EMI Payment  

Also called standard EMI, arrear is a type of EMI payment where the lender doesn’t deduct the first EMI from the loan amount. This type of EMI is ideal for borrowers without having sufficient funds to make a down payment. Thus, lenders disburse the entire loan amount after deducting only the processing fee. 

In contrast, advance payment is when the lender deducts the first EMI, along with a processing fee, before disbursement. The benefit of this is that it lowers your principal loan amount. Consequently, your EMI and interest also decrease. 

To better understand, here are the key differences between advance and arrear EMI payments. 

Particulars	Advance EMI	Arrear EMI
Timing	Beginning of the month	End of the month
Interest paid	Comparatively lower	Slightly higher due to the higher disbursed amount
EMI amount	Lower	Higher
Suitable	Ideal for borrowers with sufficient funds	Suitable for borrowers with higher fund requirements

Also Read: Online Loan Payment

Benefits of Paying EMI in Advance

Here are some of the advantages you can enjoy with advance EMI payment.  

• It is a wise use of your surplus funds as it lowers your debt liability 
• It helps you lower your monthly EMI repayment burden, helping you budget your finances smartly 
• It improves your credit score, as paying your EMIs before the due date reflects positively on your finances
• It lowers the payable interest amount, as the advance payment lowers your principal amount 
• It allows you to opt for a lower tenure, which helps you save on interest and achieve financial freedom sooner 

How Can We Pay EMI in Advance 

To pay your EMI in advance, you can opt between the lender’s web or mobile portal. Here are the steps you can follow. 

• Step 1: Go to the lender’s net banking or mobile banking portal 
• Step 2: Log in with your credentials  
• Step 3: Go to the loan section 
• Step 4: Select the loan account and amount 
• Step 5: Select your preferred payment method
• Step 6: Complete the process by following the instructions on the screen 

If you make a payment with the steps before the due date, it counts as an advance EMI. Note that this is a general overview, and the specific steps may vary depending on the lender. 

Following the steps mentioned above, you can pay your EMI amount in advance and reduce your financial liabilities. Another way to achieve financial freedom is by consolidating all your loans and credit card bills with a debt consolidation loan. This option also helps you save on paying high interest on the borrowed amount. 

For this, you can opt for the Fibe Instant Loan, which has no use restrictions, alternative credit access, and competitive interest rates. You can enjoy a loan amount of up to ₹5 lakhs with swift dispersal and repay with a comfortable tenure that fits your budget. Download our Personal Loan App or apply on our website now. 

FAQs on Advance EMI Payment

Is it ok to pay EMI before the due date?

Of course! There is no harm in paying your EMIs in advance. Contrastingly, it helps you enhance your positive credit history, boost your credit score and avoid the risk of defaults.  

Is advance EMI payment good or bad for credit?

Paying your EMIs before the due date is good for credit. This is because when you miss an EMI, your credit score drops. With advance EMI payment, you eliminate the possibility of missing the date, which is why it’s a smart idea for maintaining good financial health.

Can I pay all EMIs at once?

Yes! And it’s called pre-closing the loan account. For this, you need to contact your lender and make a one-time payment for your complete loan amount plus interest. So, if you have a question, ‘Can I pay EMI in advance all at once?’ then you need to go in for a loan pre-closure.