What happens if I pay 1 EMI extra every year?

Whether it is a home loan, personal loan, car loan or any other credit facility, the principle is the same - paying an extra EMI every year helps shorten the loan tenure and reduces your interest outgo.

This extra principal repayment works to prepay your outstanding loan amount, reducing the tenure. Also, with the principal reducing faster, the interest component in subsequent EMIs becomes smaller.

The interest savings could range from a few thousands to even lakhs, depending on the loan amount and tenure.