Personal loans help individuals to fulfill their dreams whether they are planning to renovate their home or organizing a marriage event. But sometimes having surplus money in hand makes individuals repay the loan amount in full before the expiry of tenure. This process is known as personal loan foreclosure. In order to avoid extra interest for a long tenure, people prefer foreclosure of personal loans. They save some bucks from the interest part of the personal loan. But the banks also charge personal loan foreclosure fees whenever a person closes his loan before the tenure. The fees might differ from bank to bank and a person has to through the foreclosure process. You can see the foreclosure fee of some banks that they charge on personal loans.
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Foreclosure Fee on Personal Loan
In the table given below, you can see the Foreclosure fees of different banks.
|Citibank||4% + GST|
|YES BANK||2% - 4%|
|Kotak Mahindra Bank||5% + GST|
|HDFC Bank||2% - 4%|
|ICICI Bank||5% + GST|
|Axis Bank||2% - 5%|
All the charges will be of the outstanding amount of the loan. You will have to pay these charges if you are going for a personal loan foreclosure. You must go through the documents that you need for the foreclosure.
Documents for Personal Loan Foreclosure
- Identification proof such as Passport, Driving License, or Aadhar Card.
- Loan Documents
- Bank statement reflecting the payment and clearance of the last EMI.
- Pre-payment statement
You will have to submit the above documents if you are closing your personal loan account before time.
Process of Foreclosing a Personal Loan
It is not possible to foreclose a personal loan online, so you will have to visit the nearest branch of your respective bank and request foreclosure.
- Go to the nearest branch of your respective bank.
- Meet the bank’s executive and inquire about the foreclosure process.
- Ask for the personal loan foreclosure form.
- Fill in all the necessary details in the form and sign wherever it is asked.
- Don’t forget to carry the documents that are asked in the form.
- Once you submit all the documents and the representative verifies them, you can submit the cheque or the demand draft for the foreclosure of a personal loan.
The representative will tell you the outstanding amount of the loan and the foreclosure fee. So, you will have to fill the amount on the cheque or the demand draft as asked by the bank’s representative.
Finally, the bank will give you an acknowledgment letter and the foreclosure agreement will be sent to you within a few days. This is how you will foreclose a personal loan.
Documents You Will Collect After Foreclosure
After foreclosing the loan, make sure you collect the following documents from the bank:-
- Pre-closure payment receipt
- NOC to close the personal loan.
- Personal loan closure certificate.
- Payment of dues certificate
Now you know the process for Personal Loan Foreclosure and the only benefit of foreclosing the loan is you save some bucks from the interest. But banks have a minimum loan repayment criteria between 6 months to 1 year before which you can’t foreclose a loan. You will have to pay the EMI for the asked tenure and after that, you can foreclose the loan. But foreclosure of loans will help you to pay less interest on the loan and you can save some extra money.