Personal loan preclosure: The loan is always like a financial burden. This is the reason why everyone’s effort is to repay the loan as soon as possible. If you are also paying an EMI of personal loan and thinking of finishing the loan ahead of time, then it can be a good step. This can prevent long -term interest and also provides financial relief. But this process also consists of certain conditions, fees and necessary documents, which need to be known.
Who can pre-close?
Most banks allow pre-close only when at least 12 EMIs have been repaid after taking the loan. But, if the bank has given you a loan on a concessional condition, then in some cases you allow the loan pre-close even after the same EMI. However, if you try to repay the entire loan before the fixed EMI, the bank may recover a penalty.
Pre-close step-by-step process
- Go to the bank: Most bank loans do not provide pre-closing facilities online. The customer has to go to the bank branch and apply.
- Keep the documents with: Loans are required for pre-closing loan account number and statement, valid photo ID (eg Aadhaar, PAN, Passport) and final EMI payment proof.
- Fill the pre-close form: Take the form from the branch and fill all the details in it and attach the documents.
- Pay the outstanding amount: Apart from the principal amount, it may also include any outstanding interest or pre-close charge.
- Get receipt and acknowledgment: Take a receipt from the bank immediately after payment.
- Take NOC and Closure Certificate: The bank sends you no objection certificate and loan closure certificate in a few days, which are very important documents for the future.
How much does pre-close charge seem?
It largely depends on the bank and may vary. Banks usually charge up to 4% on pre-closing between 13 and 24 months of taking a loan. At the same time, this charge becomes 3% between 25 and 36 months. However, banks often do not take any charge for closing the loan after more than 48 months.
If you talk about the charge, then this loan is also dependent on the amount, tenure and the policy of the bank. In addition, GST also applies. In such a situation, you should clear all the charge and conditions by contacting your bank before closing the loan.
What are the things to keep in mind after repaying the loan?
- Must take NOC and Closure Certificate: These documents help to improve credit scores in future and avoid any dispute.
- Check credit report: Ensure that your loan is ‘closed’ in the credit report.
- Protect all the documents: They may be needed for a long time as proof, so all documents should be preserved.
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