ECLGS 5.0 allows borrowers to foreclose their loan at nil foreclosure charges, with a total loan tenor of 60 months and no lock-in period. Check your pre-approved offer online using your registered mobile number and OTP to explore ECLGS funding solutions from Bajaj Finance.
In summary
- ECLGS foreclosure charges are nil, meaning borrowers can close their loan early without paying any foreclosure fee or prepayment penalty.
- Under ECLGS 5.0, there is no lock-in period, allowing foreclosure at any point during the 60-month loan tenor, including during the 12-month interest-only period.
- The foreclosure amount consists only of the outstanding principal and interest accrued up to the closure date.
- Borrowers can also make part-prepayments at no additional charge before choosing full foreclosure.
- Once the foreclosure payment is completed, the loan account is closed and borrowers receive closure-related documents, including a No Objection Certificate (NOC).
- Bajaj Finance offers ECLGS funding solutions designed to support eligible businesses with flexible repayment options. This page explains ECLGS foreclosure charges, foreclosure calculations, the closure process, required documents, and the differences between foreclosure and part-prepayment.
What are the foreclosure charges on an ECLGS loan?
The foreclosure charges on ECLGS loans are nil. Under ECLGS 5.0, borrowers can repay the entire outstanding loan balance before the scheduled maturity date without paying any foreclosure fee or prepayment penalty.
When a borrower chooses to foreclose the loan, the amount payable includes only:
- Outstanding principal balance.
- Interest accrued up to the foreclosure date.
- Applicable statutory dues, if any.
No additional foreclosure fee is added to the closure amount. This policy applies regardless of whether the ECLGS facility is linked to a secured or unsecured lending arrangement.
Is there any foreclosure penalty or lock-in on an ECLGS loan?
ECLGS loans do not impose the common restrictions that borrowers often encounter on other loan products.
Key foreclosure-related features
- Foreclosure charges: Nil.
- Prepayment penalty: Nil.
- Lock-in period: None.
- Part-prepayment charges: Nil.
- Foreclosure availability: Allowed throughout the loan tenor.
- NOC and closure documents: Available after closure without foreclosure-related charges.
Because there is no lock-in period, borrowers can foreclose the loan even during the initial months after disbursal if they no longer require the facility. Similarly, borrowers can make voluntary part-prepayments before deciding to close the loan completely.
How to foreclose your ECLGS loan: Step-by-step process
Foreclosing an ECLGS loan is a straightforward process that allows borrowers to close the facility once the outstanding amount has been settled.
Step 1: Review your outstanding balance
Log in to your loan account through the available servicing platform and review your ECLGS loan details. Alternatively, request a foreclosure statement that reflects the latest outstanding balance.
Step 2: Request a foreclosure statement
Initiate a foreclosure request through the designated customer servicing channel. The lender generates a foreclosure statement showing the exact amount payable on the selected closure date.
Step 3: Verify the closure amount
Review the foreclosure statement carefully. The amount generally includes:
- Outstanding principal.
- Interest accrued up to the closure date.
No foreclosure charges or prepayment penalties are added to the statement.
Step 4: Arrange the foreclosure payment
Ensure that sufficient funds are available for payment. Since interest accrues until the actual payment date, borrowers should use the lender-issued foreclosure statement for the most accurate amount.
Step 5: Complete the payment
Make the foreclosure payment through the available repayment channels. Once the full outstanding amount is received, the lender begins the closure process.
Step 6: Receive closure confirmation
After successful payment processing, the loan account is marked as closed. Borrowers receive confirmation of closure through the applicable servicing channel.
Step 7: Download closure documents
After foreclosure, borrowers can obtain:
- No Objection Certificate (NOC).
- Loan closure letter.
- Updated statement of account showing nil outstanding.
Step 8: Verify closure records
Review the closure documents carefully and retain copies for future reference. These documents serve as proof that the ECLGS facility has been fully settled.
How to calculate your ECLGS foreclosure amount
The ECLGS foreclosure amount is relatively easy to calculate because no foreclosure penalty is applied.
Components of the foreclosure amount
- Outstanding principal: The principal balance remaining on the loan.
- Accrued interest: Interest calculated up to the foreclosure date.
- Foreclosure charges: Nil.
Foreclosure calculation formula
Total Foreclosure Amount = Outstanding Principal + Accrued Interest
Example
Assume a borrower has:
- Outstanding principal: Rs. 12,00,000
- Interest accrued up to closure date: Rs. 8,500
The foreclosure amount would be:
Rs. 12,00,000 + Rs. 8,500 = Rs. 12,08,500
Borrowers should always rely on the foreclosure statement generated by the lender because interest continues to accrue until the actual payment date.
Foreclosing during the interest-only year vs the Dropline EMI phase
Borrowers can foreclose their ECLGS loan during any stage of the loan tenure without paying a foreclosure penalty.
Foreclosing during the interest-only year (Months 1–12)
During the first year, borrowers pay only interest while the principal balance remains largely unchanged.
Key implications include:
- Closure amount is closer to the original disbursed amount.
- Principal repayment has generally not started.
- Future EMI obligations are avoided entirely.
- No lock-in restrictions apply.
This option may suit businesses that no longer require the sanctioned facility after receiving it.
Foreclosing during the Dropline EMI phase (Months 13–60)
After the moratorium period ends, borrowers begin repaying principal and interest through Dropline EMIs.
Key implications include:
- Outstanding principal is lower because repayments have already begun.
- Future EMIs stop after foreclosure.
- Future interest costs are eliminated.
- The facility is closed completely after settlement.
In both cases, the amount payable consists only of the outstanding principal and accrued interest.
Documents and NOC you receive after ECLGS foreclosure
Once the foreclosure process is completed, borrowers receive documents confirming that the loan has been settled fully.
Documents available after foreclosure
- No Objection Certificate (NOC): Confirms that the ECLGS loan has been repaid in full.
- Loan closure letter: Records that the loan account has been closed.
- Statement of account: Reflects nil outstanding balance after closure.
- Closure confirmation records: Available through the applicable servicing platform.
These documents should be retained carefully because they serve as proof of repayment and loan closure.
Foreclosure vs part-prepayment of an ECLGS loan
Both foreclosure and part-prepayment help reduce borrowing costs, but they serve different purposes.
| Particulars | Foreclosure | Part-Prepayment |
|---|---|---|
| Loan status | Closed completely | Remains active |
| Amount paid | Entire outstanding balance | Partial outstanding balance |
| Future EMIs | Stop completely | Continue |
| Future interest | Stops after closure | Reduces but continues |
| Facility access | Ends | Continues |
| Charges | Nil | Nil |
When foreclosure may be suitable
- You no longer require the facility.
- You want to eliminate future interest obligations.
- You have sufficient surplus funds available.
- You prefer to close the borrowing relationship completely.
When part-prepayment may be suitable
- You want to reduce interest costs.
- You want to keep access to the facility.
- You wish to lower future repayment obligations while retaining flexibility.
What should you check before foreclosing your ECLGS loan?
Before proceeding with foreclosure, borrowers should evaluate both repayment considerations and business funding requirements.
Foreclosure checklist
- Obtain the latest foreclosure statement.
- Verify the exact amount payable.
- Ensure all accrued interest has been included.
- Assess future liquidity requirements.
- Compare the benefit of foreclosure against alternative uses of surplus funds.
- Download and retain closure documents after repayment.
- Confirm that the loan account reflects a closed status after completion.
Taking these steps can help borrowers complete the foreclosure process smoothly while maintaining accurate financial records.
What are the pros and cons of foreclosing your ECLGS loan early?
Foreclosing an ECLGS loan early can provide financial benefits, but the decision should align with business funding requirements.
Advantages
- Nil foreclosure charges.
- Nil prepayment penalties.
- No lock-in restrictions.
- Future interest obligations stop immediately.
- Remaining EMI commitments are eliminated.
- Closure documents provide proof of repayment.
- Loan account is recorded as closed after settlement.
Considerations
- Funds used for foreclosure are no longer available for business operations.
- The facility cannot be accessed after closure.
- Businesses should evaluate alternative uses of surplus capital before making the decision.
- Future funding requirements may require a separate borrowing arrangement.
Understanding both the benefits and implications can help businesses make an informed foreclosure decision.
Should you foreclose your ECLGS loan early?
ECLGS 5.0 provides borrowers with the flexibility to close their loan at any stage of the tenure without foreclosure charges, prepayment penalties, or lock-in restrictions. This allows businesses to reduce borrowing costs and eliminate future repayment obligations whenever surplus funds become available.
Before making a foreclosure decision, businesses should assess their liquidity needs, future growth plans, and alternative uses of available capital. Businesses exploring funding solutions beyond ECLGS can also consider business loans offered by Bajaj Finance.
Understanding the applicable business loan interest rate can help businesses evaluate borrowing costs and repayment affordability. Businesses can also estimate future repayment obligations using the business loan EMI calculator before making financing decisions.
