What Is the Outstanding Amount in a Loan? Simple Guide for Borrowers

Are you planning on availing of a personal loan, home loan or vehicle loan? If yes, then you will definitely come across loan terms like outstanding amount or principal amount. Knowing this term can help you better understand your loan agreement, stay up to date with loan payments, plan your budget, and avoid any potential financial strain.

Table of Content

• What is the Outstanding Loan Amount?
• Why is it Important to Regularly Check Your Outstanding Loan Amount?
• How to Check Your Outstanding Loan Amount?
• Effect of Outstanding Amount on Credit Score
• How to Reduce Your Outstanding Loan Amount?
• What is the Difference between Outstanding Amount and Remaining Balance?

To help better manage your finances and make informed decisions, here is all you need to know about the outstanding loan amount:

What is the Outstanding Loan Amount?

Outstanding loan amount is the remaining balance on your loan that is yet to be paid from your side. It includes both the borrowed principal amount and the interest amount that has been accumulated to date. This amount keeps decreasing as you repay the loan, unless there have been any fluctuations in interest rate or additional charges.

Why is it Important to Regularly Check Your Outstanding Loan Amount?

• Efficiently Manage Finances: By knowing your outstanding amount for the loan, you can effectively allocate your budget and avoid any financial strain on yourself.
• Identify Discrepancies: By reviewing your outstanding amount regularly, you can identify discrepancies or errors early and rectify them accordingly.
• Plan Early Repayment: With precise information about the pending repayment amount, you can plan for early repayment and save on interest.
• Maintain Credit Health: Monitoring your loan outstanding amount and repaying it in a timely manner can have a positive impact on your CIBIL score.

Suggested Read: Understanding Personal Loan Terms and Conditions

How to Check Your Outstanding Loan Amount?

Here is how to check the outstanding loan amount:

Via Internet Banking

• Start by visiting the official website of your lender
• Log in to your account by entering your ID and password
• Once logged in, navigate to the “Loan” section
• Click on your loan account and download the PDF file for future reference

Through the Bank’s Mobile App

• Log in to the lender’s mobile app using your credentials (mobile number, OTP, or password)
• Navigate to the ‘Statement’ or ‘Loan Details’ section
• Once there, you will be able to access the loan statement

Email statements

Some banks also share periodic e-statements to your registered email. If you don’t receive an email and want to request it or have any other query about checking the outstanding amount, feel free to connect with the bank’s customer care.

Effect of Outstanding Amount on Credit Score

Here is how an outstanding amount can affect your credit score:

• Unpaid Debt: Almost 30% of a credit score is determined by the total debt owed. A higher outstanding debt relative to your income can reflect higher default risk, resulting in a lower credit score. Even if the loan amount is manageable, any missed or unpaid loan EMI can hurt your score.
• Late Payments: Around 35% of your credit score depends on your record of paying the loan amount on time. Even a single 30-day delay or default of your loan repayment can result in lower credit scores.

Suggested Read: What is loan settlement? How does it affect your credit score?

How to Reduce Your Outstanding Loan Amount?

Here are some ways you can reduce your outstanding amount:

• Prepay your loan whenever possible
• Consider consolidating your debts to better manage your finances
• Use your extra money or savings to repay the debt
• Opt for a repayment tenure that is ideal for you
• Consider refinancing your loan to get better interest rates and a longer loan term

What is the Difference between Outstanding Amount and Remaining Balance?

In conclusion, understanding the meaning of outstanding amounts and knowing how to check it is crucial to managing your finances effectively. Nowadays, with the convenience of net banking, mobile apps, and customer service, it is easier than ever to check your outstanding balance, especially when managing an instant personal loan.

At Muthoot Finance, we prioritise transparency and ease of access for our customers. You can effortlessly view your outstanding amount through our secure online portal or by reaching out to our customer support team.