Loans & credit
Prepayment and foreclosure
Paying off part or all of a loan early to slash the interest you would otherwise pay.
Prepayment means paying extra toward your principal beyond your EMIs. Foreclosure means clearing the entire loan before the tenure ends.
Both directly reduce the outstanding principal, which cuts future interest dramatically, especially early in the loan.
Floating-rate home loans usually have no prepayment penalty for individuals, so extra payments are pure savings.
For example
Prepaying ₹2L in year 2 of a home loan can save several lakhs in interest and shave years off the tenure.