How does prepaying help in repaying my two-wheeler loan?

Loans are a boon when there is a cash crunch and help to overcome adverse financial situations. Loans are taken for significant purposes such as buying a house, an automobile, and for education. Buddy Loan is one of the aggregators that help you get the best bike loan online at lower interest rates. When loans are taken for automobile purposes, especially instant bike loans or loans against two-wheelers should be the ones that, if paid at the earliest, can turn out to be a real boon. 

Loans always bring with it an interest rate which is charged over and above of the principal amount usually amounting to 12-14% for instant bike loans or instant two-wheeler loan. Prepayment of these loans can help an individual benefit in a lot of ways like:

• Savings – Any kind of loan offered by Buddy Loan, be it instant bike loan, instant two-wheeler loan, instant bike loan online, or second-hand bike finance, everything carries with it an interest which can be waved off by a good amount of these loans are prepaid. This amount which has been waved off could be spent on other requirements, be it household or personal or this amount can also be saved and made secure. 

• Improved Debt to Income Ratio – Debt to Income Ratio is a ratio calculated by adding up all the debt amount and dividing it by the monthly income. These ratios are used by banks to decide one's financial strength and determine whether consent to borrow loans should be given or not. Hence maintaining a healthy debt to income ratio helps in future borrowings. If any prepayment is done, it helps to reduce the debt income gap hence improvise on the debt-income ratio. 

• Credit Score – This is one of the primary factors to maintain in your overall financial portfolio as it portrays your ability to manage finances, loans, investments, etc. A good credit score in the market helps to approve loans for higher limits, get low-interest rates, and more negotiation power. To achieve a good credit score, it is essential to make sure paying loan payments are made on time, or prepayment of loans also helps to elevate this score. 

• Reduce Financial Burden – Loans are always a burden and turn out to be at times the reason for stress hence always planning to manage expenses in a way so that an amount other than EMI can be invested in loan payment, thereby ending in prepayment of loan and become burden-free. 

Hence these are a few major benefits to any loan prepayment, especially two-wheelers as the amount, in this case, is a smaller amount and thus becomes easier to handle and gain all the above.