You can pre-pay the amount of the loan, though some banks will be charging a penalty on prepayment. But exceptions do exist. The State Bank of India, for example, does not impose any tax on pre-paid loans. One will also remind the bank about the rules of pre-payment so that at a later date they do not face a question. It is smart today to go with a bank that allows for periodic pre-payment of loans in part. That helps you to start paying back the principal amount as you get bonuses or rewards for purchases or some other lump sum payment.