The number of people availing personal loans is on the rise in India. It is mostly because it is an unsecured loan type and you don’t have to pledge any collateral for it.
However, you may have to deal with a higher interest rate when you avail personal loans as it comes with no collateral and runs a higher default risk.
But if your CIBIL score is 750 or more, you may also negotiate for a low interest personal loan with a lender.
Many people want to foreclose their personal loan before the scheduled tenure. This way, they ought to save on interest charges and be also ready for the next loan.
But for foreclosing the personal loan account, one needs to pay some penalty charges to the lender. It is possible to know the exact amount by using the personal loan foreclosure calculator.
The personal loan foreclosure calculator is a handy tool available on a lender’s website for free. Here is a quick guide on the personal loan foreclosure!
What is personal loan foreclosure?
As the term suggests, the personal loan pre-closing before the actual tenure is known as the personal loan foreclosure. The personal loan foreclosure is either undertaken by the lender or the borrower.
Using the personal loan foreclosure calculator, you can know the exact penalty amount you have to pay for undertaking the step.
When your lender forecloses the loan
It is the last step that a lender takes. It is when borrowers become financially incapable of repaying the remaining outstanding balance. When the borrower starts defaulting on the personal loan EMIs and more, a lender may offer to pre-close the loan.
When the borrower forecloses the loan
One of the key reasons why a borrower decides to foreclose the loan is to become debt-free. But doing that without going through lender’s terms is not a wise step. To do that, you may have to pay the penalty to your lender. You can know about the exact figure by using the personal loan foreclosure calculator.
What things to consider before pre-closing your personal loan?
Does your lender allow the personal loan foreclosure?
The first thing is checking out if your lender allows the personal loan foreclosure. Surprised? It is a valid point to check because not all lenders may let you close your personal loan account.
Check out the charges for the pre-closure
Once your lender allows a foreclosure, you may have to manage to pay the personal loan foreclosure charges. Usually, a personal loan foreclosure charge may range from 3% to 6% of the remaining principal amount.
It may not be allowed within the first year of the loan
Most lenders may not let you go for the personal loan foreclosure within the first year after the disbursal of the loan. If you are stuck in such a position, you can make prepayments early into the tenure. This way, you can avoid letting go of the savings on the interest component. It is when during the first 12 months of the tenure, you may realize that only interest is paid while the principal is still at large.
While approaching the Bajaj Finserv Personal Loan foreclosure, you should ensure carrying your ID proof, loan account number and a cheque to prepay the balance loan.
You should also ensure using the personal loan calculator on the lender’s website. This way, you can know how much to pay and if you will actually make savings or not.
Bajaj Finserv, one of the reputed NBFCs in India, offers pre-approved offers on personal loans and more. It is to simplify your loan processing.
You can check out your pre-approved loan offers by sharing your basic details like your name and mobile number.