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Everything You Should Know About Personal Loan Foreclosure

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When it comes to meeting some urgent needs for funds, nothing can beat the personal loan. It is the ‘go-to’ funding option that many people apply for these days. 

It is an unsecured type of debt which means not keeping any collateral to get the approval. If you have maintained a strong cibil score and can meet a lender’s eligibility, then you can access a large amount to meet any requirements. 

Most of the leading lenders in India also let you repay the loan over a flexible tenure of 60 months. It means that you can stretch the loan amount over a longer tenure and pay small EMIs. 

However, if you want, then you can always foreclose the loan before the ending of the actual tenure. 

Let’s know the basic aspects of the personal loan foreclosure in this post!

What is personal loan foreclosure?

As the term suggests, the personal loan foreclosure means repaying the availed loan before the completion of the actual tenure. Suppose if your personal loan repayment tenure is 5 years and if you have the money to close it earlier, you can do that. This is what is known as personal loan foreclosure. 

Foreclosing the loan before the actual tenure means that you can close the debt account earlier. It can help you use the money for other aspects of your life. 

But if you close the loan account earlier, then your creditor may charge you some amount to do that. 

The biggest benefit of the personal loan foreclosure is that you can bask in the incredible feeling of being debt-free. But at the same time, you also need to be aware of the terms and conditions of the personal loan foreclosure. This way, you won’t feel different if the lender asks you to pay the charges for the same. 

What are the charges if you go for the personal loan foreclosure?

You can’t foreclose the benefits of personal loan account on your own. You need to request it. If the lender approves it, then you may have to deal with the charges for it. Yes, the personal loan foreclosure charges may range from 3% to 6%. It will be charged on the principal amount that you are yet to repay. 

Leading lenders let you borrow up to Rs.25 lakh and pre-close the loan by levying nominal charges for foreclosure. 

Things to consider before going for the personal loan foreclosure

Before you decide to go for the personal loan foreclosure, you ought to consider a few points such as: 

  • Most of the lenders would not let you foreclosure the loan within the 1st year of the disbursal. Thus, you should check with your lender if it will permit you to do that and when during the actual tenure. 
  • The next thing is carrying your relevant ID Proof, loan account number and a cheque for prepaying the balance amount. It should be done when you are ready to approach your lender with the proposal for the personal loan foreclosure. 

If you are looking to go for the personal loan foreclosure, then you should get in touch with your lender right away and know all details beforehand. 

The same is also included in the fine print of the loan, and you can go through it to become confident.

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