What is the meaning of loan foreclosure?
Loan foreclosure is when you repay your remaining loan amount in one payment before the end of your repayment tenure. You should opt for foreclosure of the loan only when you have additional funds.
What are pre-closure charges on personal loans?
Loan foreclosure is the full repayment of your remaining loan amount in one single payment instead of paying multiple EMIs. If you have surplus funds, you can opt for the personal loan foreclosure facility. With this facility, you can repay your ongoing personal loan early. Use our personal loan EMI calculator and plan your repayment journey wisely.
Bajaj Finserv charges a nominal fee of 4.72% (inclusive of applicable taxes) on the outstanding loan amount on the day of prepayment. This is known as a foreclosure fee.
You can login into My Account - Bajaj Finance customer portal to pay personal loan foreclosure charges.
Learn more about the personal loan interest rate applicable to your personal loan.
How to calculate loan foreclosure charges?
You can calculate your foreclosure charges on personal loans using the loan foreclosure calculator. It is a simple process that aids in the calculation of the pending instalments, loan tenure, rate of interest, loan amount and the foreclosure month.
Should you foreclose your personal loan?
Foreclosing a personal loan involves repaying the outstanding balance before the loan term ends. While it can provide relief from interest payments and debt, it’s important to consider factors like loan closure charges, and your overall financial situation. If you have surplus funds, clearing the loan can help you become debt-free faster. However, it’s advised to read your loan agreement carefully, potential savings, and future goals before deciding. In short, foreclosing a personal loan demands careful consideration of individual circumstances and financial objectives.
Process of Personal Loan Foreclosure
- Visit the lender from where you’ve taken the loan from.
- Take the necessary documents and prepay the loan amount.
- After settling the loan amount along with pre-closure charges for a personal loan, the lender will issue an acknowledgement letter mentioning the loan clearance details.
- In a few cases, lenders issue a no objection certificate to the borrower.
Benefits of pre-closing your personal loan
- Preclosing a personal loan offers several benefits. It reduces interest payments, saving you money over the long term.
- It also relieves you from the burden of debt, providing financial freedom and peace of mind.
Disadvantages of pre-closing your personal loan
Preclosing might involve prepayment penalties, pre-closure charges for personal loans, and negating potential interest savings. It could impact your credit mix and reduce your credit score slightly. Also, utilising funds for prepayment might hinder other financial goals. Assess penalties, overall financial situation, and goals before deciding to pre-close.
Frequently asked questions
Foreclosure of a personal loan refers to the early repayment of the entire outstanding loan amount before the scheduled tenure ends. Borrowers can choose to settle the loan early by paying the remaining principal and accrued interest. Lenders may charge a foreclosure fee, and the borrower benefits from reduced interest payments.
Foreclosure charges can be avoided with timely payments. If you need any assistance regarding foreclosure loan charges, you can connect with your lender.
If you choose to foreclose your loan, you have to pay your entire outstanding loan amount in one go. This option helps you to close your loan early and save on the total interest amount.
Yes, foreclosure may affect your CIBIL Score negatively.
Foreclosure charges are typically imposed by lenders when borrowers pay off a loan before its term ends. Whether these charges are compulsory depends on the terms outlined in the loan agreement. Borrowers should carefully review the agreement or consult the lender to understand if foreclosure charges apply and under what circumstances.
