Foreclose your loan
Depending on the additional funds you have, you may choose to pay off the entire outstanding loan amount in one go. This is called loan foreclosure or full pre-payment of loan.
Foreclosing your loan can help you save on interest payments and reduce the overall cost of your loan.
Before you decide to foreclose your loan, it is important to carefully evaluate the terms and conditions as well as the additional charges applicable for the foreclosure of the loan.
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Repay your entire loan amount in advance
You can foreclose any of your loans in the service section by following these simple steps:
- Sign-in to our customer portal with date of birth, mobile number and OTP.
- Go to ‘Home’ and click on ‘Pay EMIs’
- Select your loan account number and click on ‘Proceed’
- Scroll to the ‘Full payment/ foreclosure’ tab
- Enter the required details and review the applicable foreclosure charges.
- Once the required details are entered, proceed with the payment to foreclose your loan.
You can also close your loan by clicking on the ‘Foreclose your loan’ option below. Once signed-in, select your loan account, click on the ‘Foreclosure’ option, and proceed with payment.
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If you have surplus funds, you can pay off your outstanding loan amount in one instalment. This will help you save on interest and ease your financial burden.
However, if you choose to foreclose your loan, you have to pay an additional fee while you close your loan.
Types of foreclosure
- Bank-Initiated Foreclosure
- Occurs when the borrower fails to make regular loan repayments or defaults on EMIs.
- The lender may foreclose on the loan and pursue legal action if necessary to recover the outstanding amount.
- Typically involves selling the collateral or property associated with the loan to recoup the lender’s losses.
- Customer-Initiated Foreclosure
- Borrowers may choose to foreclose on a loan to pay off the debt ahead of schedule.
- This option can be financially beneficial, as it reduces the total interest paid over the life of the loan.
- Customers should confirm any penalties or fees associated with early repayment before proceeding.
Advantages of foreclosing a Loan
Interest savings: Foreclosing a loan early can lead to significant savings on the total interest payable, as the loan term is shortened.
Debt-free status: Completing the loan foreclosure process allows borrowers to be free from the financial burden of monthly EMIs, improving cash flow.
Improved credit score: Paying off a loan early demonstrates financial responsibility, which can positively impact the borrower’s credit score and increase eligibility for future loans.
Reduced financial stress: Eliminating a debt obligation can alleviate financial stress and provide peace of mind, allowing borrowers to focus on other financial goals.
Asset protection: By settling the loan, borrowers ensure that their assets used as collateral are not at risk of seizure due to missed payments.
- Bank-Initiated Foreclosure
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Manage your loan EMIs
Choose from multiple payment options and repay your loan easily. Sign-in to your account to begin.
Frequently asked questions
Foreclosing a loan can be beneficial, as it reduces the total interest paid and frees up monthly cash flow, making it easier to manage finances. However, borrowers should consider any applicable fees and penalties before deciding, as these can sometimes offset the potential savings.
A foreclosure fee is a charge imposed by lenders when a borrower decides to repay their loan before the end of the agreed term. This fee compensates the lender for the loss of interest income due to the early loan termination.
Yes, foreclosure reduces the total interest payable on a loan because the borrower pays off the principal amount earlier than scheduled, thereby shortening the loan term and eliminating future interest accruals.
Paying foreclosure charges is usually mandatory, as stipulated in the loan agreement. These charges are meant to offset the lender’s loss of interest income. However, some loans may have terms that waive these fees under specific conditions, so reviewing the agreement is crucial.
