Personal Loan foreclosure: A simple guide

Planning your finances ensures that you do not land yourself in a fix. Despite checking your plans thoroughly, an unforeseen financial requirement may come up. You require money for a medical emergency, home renovation, wedding expenses, debt consolidation, etc. Turning to banks and other financial institutions and applying for a Loan is a viable way to meet your financial requirements.

There are different types of Loans available. A Personal Loan is a famous financing option to explore. It lets you borrow a significant amount to meet different financial needs. You can apply for the Loan amount at a competitive interest rate for a tenure of your choice. You can repay them in Equated Monthly Instalments as per your affordability. You can also repay the Loan by fully repaying the outstanding Loan amount before the tenure ends.

This is called Loan foreclosure. It reduces your interest liability and leads to a stress-free life. Here are other details of Personal Loan foreclosure to know about.

Personal Loan foreclosure charges

When you opt for Loan foreclosure, you repay the Loan amount before the tenure ends. This means the bank loses out on interest earnings. The bank charges a foreclosure penalty to compensate for the lost interest earnings. This penalty charge varies from one bank to another. Approach your bank to learn about foreclosure terms and charges. Consider foreclosing your Instant Personal Loan if you have the necessary financial resources.

Paying the foreclosure charges is better than increasing your interest liability. If you have a long-standing relationship with the bank, they may waive off the foreclosure charges. This works in your favour.

Personal Loan foreclosure procedure

You need to complete a simple procedure to foreclose Personal Loans. You can either visit the nearest bank branch or use the Banking App to raise a Personal Loan foreclosure request. Using the app is a more convenient option as it lets you conduct banking from anywhere at any time. You need to submit your Loan documents, such as your Personal Loan EMI schedule and bank statements showing the latest EMI payments.

Once the bank receives the foreclosure request, they verify your documents and calculate your outstanding Loan amount. They send an outstanding Loan amount statement. You need to repay the amount via your preferred payment mode within a stipulated time frame.

Personal Loan foreclosure statement

The bank sends a Personal Loan foreclosure statement on repayment of the outstanding Personal Loan in India amount. This statement indicates you have fully repaid the Loan amount and owe nothing to the bank. Keep the statement handy to ensure no claims of non-repayment arise.

If you had automated Personal Loan EMI payments, be sure to cancel them. You should also check your credit scores after foreclosing your Personal Loan to know where you stand financially.