What is the meaning of loan foreclosure?
Loan foreclosure is when you repay your remaining loan amount in one payment before the end of defined tenure. We suggest you to opt for foreclosure of the loan only when you have additional funds to manage your personal expenses.
What are pre-closure charges on personal loans?
Loan foreclosure is the full repayment of your remaining loan amount in one single payment instead of paying multiple EMIs. If you have surplus funds that you would like to use to repay your ongoing personal loan, you can opt for the personal loan foreclosure facility. We suggest you to use our personal loan EMI calculator and plan your repayment journey wisely.
Bajaj Finserv charges a foreclosing fee on the personal loan principal outstanding amount on the day of prepayment.
Login into Bajaj Finserv Customer Portal to pay personal loan foreclosure charges.
Learn more about the personal loan interest rate applicable to your personal loan.
How to calculate loan foreclosure charges?
You can calculate your foreclosure charges on personal loans using the loan foreclosure calculator. It is a simple process that aids in the calculation of the pending instalments, loan tenure, rate of interest, loan amount and the foreclosure month.
Should you foreclose your personal loan?
Foreclosing a personal loan involves repaying the outstanding balance before the loan term ends. While it can provide relief from interest payments and debt, consider factors like charges on pre-close your personal loan, interest savings, and your overall financial situation. If you have surplus funds, clearing the loan can improve your credit score. However, evaluate alternative uses for the money, like emergency funds or higher-interest debt. Analyse terms, potential savings, and future goals before deciding. Seek financial advice if uncertain. In short, foreclosing a personal loan offers benefits but demands careful consideration of individual circumstances and financial objectives.
Process of Personal Loan Foreclosure
- Visit the lender from where you have taken the loan from.
- Take the necessary documents and prepay the loan amount.
- After settling the loan amount along with pre-closure charges for personal loan, the lender will issue an acknowledgement letter mentioning the loan clearance details.
- In a few cases, lenders issue a No Objection Certificate to the borrower.
Benefits of pre-closing your personal loan
- Preclosing a personal loan offers several benefits. It reduces interest payments, saving you money over the long term.
- It improves your credit score by closing the loan account.
- It also relieves you from the burden of debt, providing financial freedom and peace of mind.
Disadvantages of pre-closing your personal loan
Preclosing might involve prepayment penalties, pre-closure charges for personal loans, and negating potential interest savings. It could impact your credit mix and reduce your credit score slightly. Also, utilising funds for prepayment might hinder other financial goals. Assess penalties, overall financial situation, and goals before deciding to pre-close.
Frequently asked questions
Foreclosure of personal loan refers to the early repayment of the entire outstanding loan amount before the scheduled tenure ends. Borrowers can choose to settle the loan early by paying the remaining principal and accrued interest. Lenders may charge a foreclosure fee, and the borrower benefits from reduced interest payments.
Foreclosure charges can be avoided with timely payments. If you need any assistance regarding foreclosure loan charges, you can connect with your lender.
Foreclosure does not reduce interest on a personal loan either. Foreclosure is a legal process used by lenders to take possession of collateral (such as a home or other assets) when the borrower defaults on the loan. However, personal loans are typically unsecured, meaning they do not have any collateral attached to them.
Yes, foreclosure can affect the borrower's CIBIL Score. Failing to repay a loan and incurring foreclosure charges can lead to a negative impact on the credit score, affecting the borrower’s future creditworthiness.
Foreclosure charges are typically imposed by lenders when borrowers pay off a loan before its term ends. Whether these charges are compulsory depends on the terms outlined in the loan agreement. Borrowers should carefully review the agreement or consult the lender to understand if foreclosure charges apply and under what circumstances.
