Should I prepay my car loan early or keep paying EMIs?

Short answer
Prepaying a car loan early usually saves money. But keeping EMIs also makes sense in some situations. The right choice depends on interest rate and your cash comfort.

When Prepaying Your Car Loan Is a Good Idea

Car loans usually come with higher interest compared to home loans. If you have surplus cash and your emergency fund is sorted, prepaying helps reduce interest outgo. Loan jaldi close ho jaata hai, monthly burden kam hota hai, and mental relief milta hai.

If your car loan interest is high and tenure remaining is long, early prepayment gives clear savings. Especially agar bonus ya extra income mila hai, using part of it for prepayment is a smart move.

When Continuing EMIs Makes Sense

If your car loan interest rate is low and EMIs are easily manageable, there is no pressure to rush. Prepaying should not wipe out your savings. Agar prepayment ke baad buffer nahi bachega, better to continue EMIs.

Also, some car loans charge prepayment penalties in the initial years. In such cases, savings kam ho sakti hai. Penalty check karna zaroori hai before deciding.

Part Prepayment Is a Balanced Option

You do not have to choose extreme options. Part prepayment reduces principal while keeping some cash with you. EMI ya tenure kam ho sakta hai, without stressing your finances. Yeh middle path kaafi practical hota hai.

Credit Score Angle

Closing a car loan early does not harm your credit score. In fact, a closed loan with good repayment history looks positive. Bas ensure karo ki closure properly reflected ho.

Final Takeaway

If interest is high and you have spare money, prepaying car loan early is usually better. If cash flow tight ho sakta hai, continue EMIs. Decision paisa bachane ke saath peace of mind bhi dekh kar lo.