Personal Loan Pre closure Facility

A pre-closure facility in a personal loan allows borrowers to repay their loan in full before the agreed-upon loan tenure. It provides borrowers with the flexibility to close their personal loan early if they have the means to do so.

When you opt for a personal loan, the lender calculates the interest you will pay based on the agreed-upon tenure. However, if you choose to repay the loan before the tenure ends, you will save on the interest that would have accrued over the remaining period.

Here’s how the pre-closure facility typically works:

Pre-closure Charges: Lenders may charge a fee for closing the loan early, known as pre-closure charges. These charges can vary depending on the lender and the terms of the loan. It’s essential to check the loan agreement or consult with the lender to understand the applicable pre-closure charges.

Eligibility: Some lenders may have specific eligibility criteria for availing the pre-closure facility. For example, they may allow pre-closure only after a certain number of EMIs (Equated Monthly Installments) have been paid.

Calculation of Outstanding Amount: When you decide to pre-close your personal loan, the lender will calculate the outstanding loan amount. This includes the principal amount, any interest due, and the applicable pre-closure charges, if any.

Repayment: Once you have the information on the outstanding amount, you can repay the loan in full. This can be done through a lump-sum payment or by opting for a balance transfer to another lender if you wish to continue with a new loan.

It’s important to note that not all personal loans come with a pre-closure facility, and the terms and conditions can vary between lenders. Before applying for a personal loan, it’s advisable to check with the lender about their pre-closure policies and any associated charges.