How to calculate the foreclosure amount of a personal loan?

You may have taken your personal loan long back when your salary was a fraction of what you earn today. However, if you can easily pay off your loan from your salary, you need to consider loan foreclosure.

Understanding the loan foreclosure process is crucial if you want to settle your loan before the designated tenure. Let us understand how to calculate the foreclosure amount of your personal loan so that you can be empowered to make informed financial decisions. As a trusted loan provider, Finnable is here to help you navigate this process with ease and efficiency.

What is Foreclosure and Why Consider It?

Foreclosure refers to the early repayment of a loan, allowing you to close the loan before the scheduled tenure. There are several reasons why you might consider foreclosure, such as reducing your overall interest burden, improving your credit score, or freeing up your financial resources for other purposes.

Factors Influencing the Foreclosure Amount

The foreclosure amount is determined by a combination of factors, including the following:

  1. Loan Principal:

    The outstanding principal amount of your loan plays a significant role in calculating the foreclosure amount. This amount decreases with each EMI payment you make.

  2. Interest Rate:

    The interest rate on your loan affects the overall interest accrued. Higher interest rates result in a larger interest component, impacting the foreclosure amount.

  3. Remaining Loan Tenure:

    The remaining tenure of your loan also influences the foreclosure amount. The longer the tenure, the higher the overall interest paid and larger the foreclosure amount.

Steps to Calculate the Foreclosure Amount

Here’s how to calculate the foreclosure amount on your personal loan:

  1. Step 1:

    Gather Loan Details- Collect all relevant loan documents, including the loan agreement, amortisation schedule, and current loan statement.

  2. Step 2:

    Check for Foreclosure Charges- Review your loan agreement to determine if there are any foreclosure charges or prepayment penalties. Finnable ensures transparency by providing clear information on foreclosure charges upfront.

  3. Step 3

    Calculate Outstanding Principal- Determine the outstanding principal amount of your loan by referring to your loan statement. This figure represents the remaining balance to be repaid.

  4. Step 4:

    Consider Foreclosure Charges- If there are foreclosure charges applicable, add them to the outstanding principal amount. These charges are typically calculated as a percentage of the outstanding principal and vary between lenders.

  5. Step 5:

    Calculate Interest Rebate- Depending on the terms of your loan agreement, you may be eligible for an interest rebate upon foreclosure. Subtract this rebate from the total interest payable to arrive at the interest component of the foreclosure amount.

  6. Step 6:

    Finalise the Foreclosure Amount- Add the outstanding principal, foreclosure charges, and interest component to determine the final foreclosure amount. This represents the total amount required to settle your personal loan.


Knowing how to calculate the foreclosure amount on your personal loan is a crucial step towards achieving financial freedom. By understanding the factors that influence the foreclosure amount and following the steps outlined above, you can confidently make informed decisions about settling your loan ahead of schedule.

Frequently Asked Questions (FAQs):

Calculating the foreclosure amount involves considering factors such as the outstanding principal, foreclosure charges (if applicable), and the interest component. You can use online calculators or consult with your loan provider for precise calculations. 

Foreclosure charges and prepayment penalties vary between lenders and loan agreements. At Finnable, the foreclosure charges are levied on the pending principal amount and depend on the tenure of the loan. 

Yes, Finnable allows borrowers to make partial prepayments towards their personal loans. This helps reduce the outstanding principal amount and subsequently lowers the overall interest burden. Finnable offers flexible foreclosure options, including partial prepayments, to suit your financial capabilities. 

The availability of an interest rebate upon foreclosure depends on the terms and conditions of your loan agreement.

Finnable is committed to providing exceptional services throughout your loan journey, including the foreclosure process. Our dedicated customer support team is available to guide you on how to calculate the foreclosure of your personal loan, answer your queries, and provide personalised assistance tailored to your needs. We ensure transparency in foreclosure charges and offer flexible options for prepayment.

Amit Arora


I am a seasoned retail banker with over 21 years of global experience across business, risk and digital. In my last assignment as Global Head Digital Capabilities, I drove the largest change initiative in the bank to deliver the end-to-end digital program with over US$1 billion in planned investment. Prior to that, as COO for Group Retail Products & Digital, I implemented a risk management framework for retail banking across the group.
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