Personal Loan Preclosure Procedure

Types of Personal Loan Closures

Here are the various modes to close a personal loan:

Pre-Closure

If you close the personal loan before the end of the term, you will save money on EMIs. You may choose to close your personal loan after paying a minimum of twelve EMIs. When you do the pre-closing of a loan, you are required to pay the current month's EMI, any overdue dues, and the pre-closing costs.

Regular Closure

Under regular closure, you can pay off EMIs in a timely manner and close the personal loan as per the fixed loan tenure. Following the payment of the last EMI, you must notify the lender in order for the lender to provide the NOC for the loan closure as well as the loan closure certificate.

Part-Payment Closure

You can lower your monthly installments and the term of the loan with the help of the part-payment closure. 

Personal Loan Pre-Closure Process

Here are the steps to follow for the pre-closing of a personal loan.

1. To start, you need to visit the bank’s branch to close a personal loan as  banks usually don't provide the service of pre-closing a personal loan online. 

2. Next, you should ask for a pre-closure form from a bank official. If you are not familiar with the procedure of pre-closing a personal loan, you may seek help from bank professionals. 

3. Complete the application form carefully with the required details. 

4. After filling the pre-closure form, submit it along with the necessary documents, including ID proof, loan documents, etc.

5. Following the submission, you will be asked to do the payment for the pre-closing of the personal loan.  You can do the transaction through cash, cheque, or Demand Draft.

6. Thereafter, the bank will provide you with an acknowledgement letter. 

7. The final pre-closing personal loan document will be sent to you in a few days.

In any case, if you are not able to visit the bank, you may send another person in your place for the pre-closing process along with an authorization letter signed by you. You are also required to provide all necessary information, including your ID proof, address proof, loan documents, etc. 

Documents Required for Personal Loan Pre-Closure

The documents that are required to close a personal loan are listed below:

• Documents pertaining to the loan

• Proof of Identity (Aadhaar card, Driving license, Voter ID card, Passport)

• Resident proof (Rent agreement, Passport, Aadhaar card, Utility bills)

• Loan statements that show the total amount of EMIs paid to date

• Demand Draft or cheque

Personal Loan Pre-Closure Charges

Every bank has its own pre-closing personal loan charges. Some of them are mentioned below:

*Fees and charges are subject to market conditions and financial institutions’ discretion.

Documents You need to Collect after Personal Loan Pre-closure

After the pre-closing of a personal loan, there are a few necessary documents that you must collect from your concerned bank.

Here is the list of documents.

• You should check for the receipt of the pre-closure payment.

• You must collect a NOC from the bank after the pre-closure of the loan.

• A certificate of personal loan closure is also required to be picked up from the bank.