How To Close Personal Loan - Regular Closure And Pre-Closure

Personal loans are ideal owing to their flexible usage. While other loan types need security or apply usage limitations, personal loans offer relaxation in both. If you need urgent funds and have a good credit score, you may get a personal loan within 72 hours. The repayment process includes paying the principal amount with interest.

However, completing the repayment of the personal loan does not signify closure. This blog will talk about steps to close a personal loan and the ways to close it successfully with minimum hassle for a pre-closure.

Why Do You Need To Close A Personal Loan?

From applying for a loan until closure, each step is important and shapes your financial future. Your current personal repayment process determines your future ability to obtain additional loans and your credit score. Consequently, it's crucial to get proper closure on your personal loan. The following are the effects that result from not closing your personal loan appropriately:

• Outstanding debt in your name will ruin your credit score.
• It will affect the EMI value in current loans.
• You might not get loans or face problems getting loans in the future.

Prerequisites For Regular And Foreclosure Of Personal Loan

1. For General Loan Closure

To close your regular or existing personal loan, you need to submit the following to your lender:

• Personal Loan Account Number

A loan account number is an essential part of the personal loan. You can find the loan account number on your loan statement.

• Identity Proof

Identity proofs such as Permanent Account Number (PAN), Aadhaar card, voter ID, birth certificate, or government-issued or authorized cards are accepted for personal loans.

• Other Documents

A loan approval document, loan account statement, or any other loan-related document is required for personal loan closure.

Steps to close your personal loan
Step 1: Visit the lender’s branch.
Step 2: Share your loan account number at the counter to close your existing loan.
Step 3: Provide the executive with all prerequisites.
Step 4: Collect a Non-objection certificate from the bank.
Step 5: If there is a problem, get in touch with the help desk.

2. For Foreclosure

Check with your lender for the exact quote for foreclosure. In some cases, there are some charges and penalties applied.

Actions to foreclose a personal loan
Step 1: Visit the lender’s branch.
Step 2: Share your loan account number at the counter with the request to foreclose on your existing loan.
Step 3: Provide the executive with all prerequisites, such as identity proof.
Step 4: Submit the pre-closure cheque or demand draft.
Step 5: The lender will issue an acknowledgement letter of closing the loan. In some cases, the bank releases a Non-objection certificate immediately.
Step 6: If there is a problem, get in touch with the help desk.

FAQs

Q1. Is getting personal loan closure essential?
Ans. From applying for a loan closure, each step is important and shapes your financial future. Your current repayment process determines your future ability to obtain additional loans.

Q2. Do lenders apply extra charges during the foreclosure of a personal loan?
Ans. Yes. Each lender has a different set of rules and regulations for personal loans. Therefore, there could be penalties or additional fees during foreclosure.