As they do not come with an end-use criterion, personal loans are the most popular credit instruments to fund all types of financial needs – from emergencies to life dreams. However, where most applicants go to great lengths to familiarise themselves with the application procedure, they hardly pay attention to personal loan closure.
To close your personal loan the right way, you need to go a step further than repayment. This guide will let you know all about personal loan closure.
Types of Personal Loan Closure
This is the most basic way to close your personal loan. Under regular personal loan closure, a borrower repays the loan amount plus the interest applicable in Equal Monthly Instalments (EMIs), and the loan is closed after complete repayment at the end of the pre-decided tenure.
Regular personal loan closure happens in accordance with the terms mentioned in the loan agreement. Such a personal loan closing process does not have any additional costs or charges involved.
Pre-closure or foreclosure
It may be possible that you acquire enough funds, maybe via higher ROIs in your business or some other reason, to pay off your personal loan sooner, which means, before the completion of the loan tenure. If under such circumstances, you wish to completely repay your personal loan and close it, you can do so. This personal loan closing process is known as pre-closure or foreclosure.
Additional Reads – Everything You Need To Know About Personal Loan Foreclosure
Different lenders have different terms and conditions for such kind of personal loan closure. For example – some lenders may allow a foreclosure after 6 months from the date of loan sanction, while others may set the bar at 12 months. Make sure to go through your loan agreement thoroughly to know this clause.
It is important to remember here that foreclosure of a personal loan will accompany certain charges known as foreclosure charges.
Part prepayment of personal loan
Though not exactly a personal loan closure, part prepayment or partial prepayment does help in closing the loan sooner. There may come a time when you have extra funds – could be a bonus or some windfall gain. However, the amount may not be sufficient enough to pay off the entire personal loan amount. In such a case, you can opt for repaying a portion of your personal loan.
Before you make a part pre-payment, keep in mind that lenders often impose limitations on the amount or frequency of part prepayments. Moreover, partial prepayment of a personal loan also accompanies certain charges known as part prepayment charges. You can calculate your prepayment amount using personal loan prepayment calculator.
Additional Reads – Check Out the Benefits of Prepayment and Partial Payment of Personal Loan
What to Do After Personal Loan Closure?
Regardless of whichever personal loan closure route you take, all your transactions, including payments, defaults, etc. are recorded in your credit report. Immediately after closing your personal loan, your lender will update the details to CIBIL, based on which your future CIBIL score will be evaluated.
After repaying your instant personal loan, make sure to check with your lender whether the information has been updated to your profile. If not, submit a written request to your lender, asking to do the needful.
Are you planning to apply for personal loan? If yes, then apply with India’s leading lending institution, Tata Capital. We offer personal loans for self-employed and salaried individuals.
With us, enjoy flexible repayment options, minimal documentation hassles, and personal loan interest rates as low as 10.99%. Before you avail personal loan online, check your personal loan eligibility, determine your ideal EMI using our online personal loan EMI calculator, and then submit the relevant documents.
So, what are you waiting for? Get in touch with us today to begin your application process.