How to Close Personal loan

Procedures to Follow When Closing a Personal Loan

30 Jul 2020
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A Personal Loan can be used in numerous ways to ease financial crunches. However, getting a personal loan also means that you need to close that loan within a specific period to avoid any late penalties. As you come closer to your last EMI repayment, you might have a plan for your future finances, you may want to save your finances, invest in other beneficial options, or even opt for other loan options. But before doing any of that, you should pay off the loan with the highest rate of interest first, this will help ease the financial burden. If you have a personal loan and other kinds of debt like a home loan, car loan, top up loan etc., you need to prioritize closing the personal loan first or else it can increase your debt burden.

Types Of Personal Loan Closures

  • Closure for Regular Personal Loan: In this the borrower clears all the EMIs on the set tenure and closes the loan, followed by the payment of the last EMI. Also, after closing the loan the borrower has to acquire a No Objection Certificate (NOC) for the closure of the loan along with a personal loan closure certificate.

  • Pre-Closure for Personal Loan: Pre-closure of personal loan is when the borrower closes the loan before the set tenure. In most cases, the borrower can opt for a loan pre-closure after a year or payment of a minimum of 12 EMIs. During the foreclosing process of the loan, the borrower will pay the EMI of the current month and any outstanding dues if there are with the foreclosure fees charged

  • Part-Payment for Personal Loan: If the borrower wishes to reduce the monthly loan installments and the tenure of the loan, he/she can opt for a part payment on loan. The part payment amount will be subjected based on the terms and conditions set by the lender.

Procedure for Regular Closure of Loan Account

  • Step 1:For a regular loan closure, you have paid a stipulated amount and number of EMIs for loan repayment.

  • Step 2:Once you’ve reached the end of the loan amount, the next step is to inform the bank regarding the same so that they can verify the claim.

  • Step 3:You are required to submit your identity proof, loan account number and a cheque if you have any outstanding amount. The documents go under verification by the lender before the loan is closed.

  • Step 4:The next step is to get a No Objection Certificate (NOC) from the bank or financial institution; this certificate will serve as proof of regular closure of loan account closure by full repayment of loan.

  • Step 5:You also have the option to contact the customer support team regarding the closure of your loan account.

Procedure to Pre-close Your Loan Account

  • Step 1:The procedure for pre-close remains the same wherein you inform your lender to check the outstanding loan amount for loan repayment.

  • Step 2:Submit all the documents required with the financial institution along with all the information regarding your loan EMIs and a cheque to clear the remaining dues if any.

  • Step 3:Some banks have penalty charges on prepayment of loan, which has to be settled by the borrower along with the loan amount.

  • Step 4:Once all the formalities are completed the loan account is closed, you will be issued an acknowledgement letter with the details of clearances. This letter will be preserved as proof of pre-closure of loan.

  • Step 5:The borrower can also procure a No Dues Certificate (NDC) from the financial institution.

Documents Required

  • Loan account number that is mentioned on the loan account statement.

  • Identity proof such as Passport, Aadhaar Card, Voter ID card, etc.

  • Documents like a loan approval letter, loan account statement and other such documentation issued by the lender.

  • Loan EMIs paid till date.

  • Cheque or demand draft.

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Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.”