Important things to Consider For Personal Loan Foreclosure

Personal loans are flexible enough whether it comes to the end-use of the loan amount or repayment. Personal loans are offered with a repayment term between 12-60 months. Borrowers have the option of personal loan foreclosure also. If the borrower has surplus money during the loan term, they can prepay the loan amount and foreclose the account before the loan term ends. 

• Lock-in Period: Customers should know that there can be a lock-in period for a personal loan foreclosure. Customers can foreclose the personal loan account only after completing this period  after the loan sanction. It can be six months to one year. 
  
• Documents Required: Few documents are required to submit to complete the loan foreclosure process: 
  
• Latest loan statement
  
• Identity proof
  
• Address proof
  
• Cheque or demand draft (DD) for the outstanding loan amount 
  
• All loan-related documents
  
• Foreclosure Fee: While checking for personal loan eligibility or other terms, customers should check if any foreclosure charges are applicable on personal loans. Generally, lenders charge a fee to foreclose a loan account. It varies at different stages of the personal loan tenure. For example, if the borrower has paid 24-35 EMIs, it can be 3% of the outstanding principal loan amount. 
  
• Favourable Prepayment Period: Experts suggest foreclosing a loan account during the initial stage of the loan term. It is because an EMI is made up of principal amount and interest. Initially, the loan principal is high which increases the loan amount. Prepayment at a later stage may not be as much as beneficial for borrowers as it is in the first half of the loan tenure.
  

Thus, interest costs depend on personal loan eligibility, tenure and loan amount. Customers have the option of personal loan foreclosure to save big on interest/borrowing costs with informed decisions. 

Also Read: A complete Guide for a Personal Loan for Women