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What is the Best Way to Pre-Close Personal Loan?

A Personal Loan helps us to tide over uncertain financial circumstances. A personal loan may help us overcome a medical emergency, admission fee for upskilling courses, home renovation and other requirements. Despite the utility of a personal loan, it comes with a cost. Applicants have to pay interest with every monthly instalment.

However, if one has the money to pay, pre-closing the personal loan is a better option as it helps save on the interest and be free of paying monthly instalments at a high cost. One may also go for a pre-closure in case of a balance transfer from one lender to another.

Leading financial institutions allow a pre-closure of the personal loan by paying the outstanding amount and pre-payment charges as per the agreement. Most loan applicants are oblivious to the pre-payment charges as these get overlooked in the emergency of getting instant personal loans. LoansJagat helps educate applicants and highlights terms, conditions and costs for an informed decision.

LoansJagat offers the best personal loan in Delhi and other cities across the country, tools like a Personal Loan EMI Calculator and other resources. LoansJagat also provides facilities like Balance Transfer and debt reconciliation.

What are the Personal Loan Pre-Closure Charges?

A borrower may pre-close a personal loan after a minimum of 12 instalments. The borrower also has to pay the current month’s EMI and any other outstanding amount along with the foreclosure charges. Here are the general terms of the top lenders for a personal loan foreclosure.

  • HDFC Bank    2% – 4%
  • ICICI Bank      5%
  • Yes Bank        2% – 4%
  • CitiBank          4%
  • Kotak Mahindra Bank 5%

Lenders also need to charge the applicable GST on the pre-closure charges.

Can a borrower make a part payment for a Personal Loan?

Yes, a borrower may make a part payment for the personal loan to reduce their monthly liability. The respective lender provides the part payment terms in the personal loan agreement.

What is the Process for Personal Loan Pre-Closure?

The borrower needs to visit the branch of the financial institution. If the borrower can’t physically travel, a representative can carry a signed authorization letter. Pre-closure is not possible online. Here are the steps for a personal loan pre-closure.

  1. Carefully study and fill the personal loan pre-closure form in the branch.
  2. Submit the KYC documents along with the pre-closure form. Some documents generally needed are:
  3. Aadhar Card/ Passport/ Driving Licence/PAN Card or Voter ID Card.
  4. Loan statement and other related documents.
  5. Last 6 Month Bank statement with visibility of the latest EMI clearance.
  6. Make payment using cheque/ demand draft/ account transfer or cash.
  7. Bank provides an acknowledgement letter and the turnaround time for the loan closure.

What are the documents required for Personal Loan Pre-Closure?

Here are the documents needed for the pre-closure of a personal loan.

  1. Loan Statement and other relevant loan documents with details of EMI paid.
  2. Aadhar Card/ Passport/ Driving Licence/PAN Card or Voter ID Card for address and identity proof.
  3. Payment Slip/ Cheque or Demand Draft

What are the documents to be collected after Personal Loan Pre-Closure?

The below documents from the respective financial institution are to be collected.

  1. Payment receipt for the pre-closure amount
  2. No Objection Certificate received from the lender.
  3. Certificate for the closure of Personal loan.
  4. Certificate of Payment of dues.

Do all lenders charge a Personal Loan Pre-Closure Fee?

No, Some lenders do not charge a fee for personal loan foreclosure. State Bank of India and Axis Bank usually do not charge a personal loan pre-closure amount. LoansJagat helps individuals to understand all the charges, including the Personal Loan Pre-Closure.

Do all lenders charge a Personal Loan Part-Payment Fee?

No, Most lenders do not charge a fee for the part payment of the personal loan. LoansJagat helps applicants understand the charges and choose the best personal loan after comparing the top lenders.

How does Personal Loan Pre-Closure impact the Credit Score?

Timely payments of personal loan instalments increase the credit score. While a pre-closure also has a positive impact on the credit score. LoansJagat recommends obtaining a personal loan only when it is necessary. Personal Loan EMI Calculator on the LoansJagat website helps applicants to understand the implication of personal loans.

Can a lender stop a Personal Loan Pre-Closure?

The borrower has to follow the terms and conditions laid by the respective lender. Following these terms is essential for availing of Personal Loan Pre-Closure. LoansJagat provides clarity and highlights the pre-closure terms of each lender.

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