Personal loan closure

Posted by Trishya Sharma on March 6th, 2020

There would have been crucial times when you might have applied for a personal loan. May be it was a kind of urgent need or need for a daily life purpose such as paying educational fee or wedding funds etc. People usually take personal loans when their monthly expenses reach out of the limit of their monthly salary. 

However, later, it usually gets tough for them to pay back with interest. Therefore, people set a certain amount every month that has to be kept aside for repayment. Currently, the interest rate for a personal loan is about 11.25% to 35.1%. Your lender has the authority to decide this rate according to your monthly income and other factors that influence your life.

People say that when an individual takes a loan, he carries a responsibility upon his head until the time he closes it. It can be very relieving to clear your debts and close personal loan. Now you become the authority as you can manage your finances freely without any burden of debt or repayment. However, there are two different types of method to close personal loans as mentioned below:

1. Pre-closure or Foreclosure

2. Regular Closure

What is personal loan Foreclosure/Pre-closure?

The word Foreclosure or Pre-closure are evident of its meaning that says that it is when the loan taker decides to clear the debt by repaying the loan amount with interest before the contract ends. 

Foreclosure turns out to be beneficial for you as you get to save a good sum on the daily or monthly interest (whatever is decided in the agreement) and also on the EMI’s.

Also, you must be aware of your lender’s terms because some of them charge you for foreclosure of personal loan whereas some of them allow it by themselves after about 6 to 12 months from the actual date of loan sanction. You must count the pros and cons of pre-closure and then go for it. If you are applying for an online loan, you might be at benefit, because your lenders won’t charge you for foreclosure. They are much more feasible as compared to some local or private lenders.

Make sure of the following things at the time of pre-closure of personal loan:

• Visit your lender or private bank from where you took the personal loan

• Carry all the needed documents along with your signed contract.

• Receive the letter given by the bank after the repayment is done for future record.

What is Regular Closure?

When an individual or the borrower closed the Instant Personal loan after the ending of the tenure by paying installments as decided in the contract, it is referred to as regular closure of personal loan. You are free of this burden after repaying it at its expected time and you do not have to get involved in 

The closure happens at the end of the pre-decided tenure when the whole loan has been repaid. There is no additional cost or charged involved.