When you avail a loan, it is usually repaid in the form of EMIs. After paying a few EMIs, you decide to repay the balance loan amount in full, before the completion of the loan tenure. This process of single repayment of the the balance is known as personal loan foreclosure.
Let’s assume that you have taken a small cash loan of Rs. 150,000 from Finnable for 1 year at 17% personal loan interest rate. In this case, you will be paying Rs. 13681 as your monthly EMI to your lender.
Now, after 6 months, you receive a bonus from your company. While you have multiple options as to how to spend the money, you decide to settle or close your loan earlier than its expected tenure of one year. Here you have foreclosed your personal loan before your loan duration ends.
If you are thinking of foreclosing a loan, here is a guide that can help you with the process:
There are two types of loan closure:
Personal loan foreclosure can be carried out by the borrower and the lender, depending on the circumstances:
There are multiple benefits of foreclosing an instant loan. These include:
There are also disadvantages to personal loan foreclosure. These include:
Before you start paying your debt in full, check with your lender as to how much personal loan foreclosure charges you will need to pay. These charges vary from lender to lender.
At Finnable, the foreclosure charges are levied on the pending principal amount and depends on the tenure of the loan.
6 month – 4.5%
6 – 12 months – 4%
12 – 24 months – 3.5%
24 – 36 months – 3%
Not all lenders have charges for prepayment. You can close a personal loan with no foreclosure charges with certain institutions.
You will need the following documents to foreclose the loan:
Foreclosing a personal loan is a good idea if you want to clear your debt. Before you do so, understand the pros and cons of foreclosing the loan. Also, calculate the foreclosure charges on the personal loan before making a decision. A personal loan is only a liability if you think of it as one. It can be the financial aid you need in a time of crisis.
You can apply for small cash loans with your Aadhar card through Finnable’s online personal loan app. The process is seamless and quick. Moreover, you can apply for personal loans for salaried with minimal documentation.
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Finnable is one of the fastest growing financial technology (Fintech) start-up with an NBFC license from RBI providing hassle free loans. Our mission is to make Personal loans available in less than 24 hours
Example of Personal Loan for Salaried Professionals✓ Loan Amount from ₹50,000 to ₹10,00,000✓ Repayment period (loan tenor) options vary from 6 to 60 months ✓ Annual Interest Rate (APR) is 16% to 26% (on a reducing balance basis) + processing fees of 3 to 4% on the principal loan amount ✓ For Example – a loan of ₹1,00,000 with an APR of 16% (on a reducing balance basis), repayment tenure of 12 months, processing fee of 3%. The processing fee will be ₹3,000 + ₹540 GST with monthly EMI will be ₹9,394. The total loan amount will be ₹1,03,540. Total interest payable over 12 months will be ₹9,191. Total loan repayment amount is ₹103540 + ₹9191 = ₹1,12,731 *These numbers are for representation only and the final interest rate or processing fee may vary from one borrower to another depending on his/her credit assessment.✓ Loan Prepayment Charges: 3 to 6% charge + 18% GST on the remaining principal amount (allowed after 6 EMI payments)Why is Finnable the best personal loan app?Instant Loans within 48 hours: Gone are the days when you had to wait weeks & months to get a loan approved.Completely Digital/Paperless: Finnable instant loan app offers a complete digital service to help save time as well as paper!
Contact Us: Drop us an email: email@example.comAddress: IndiQube Lakeside, 4th Floor Municipal No. 80/2 Wing A, Bellandur Village Varthur, Hobli, Bengaluru, Karnataka 560103Responsible LendingFinnable has partnered with RBI authorised & regulated NBFCs/Financial Institutions.Our policies and services are fully regulated and legally compliant.
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