Foreclosure and Part Prepayment Charges on Personal Loan

One of the best ways to close your personal loan early is to apply for the part-prepayment or foreclosure facility. Generally, up to 5% of the outstanding loan amount is charged on pre-closing the loan. Let’s delve deeper into these concepts and understand how these two services can help you close your personal loan faster.

You may find yourself in possession of a huge sum of money, which is enough to repay the entire outstanding principal amount of your loan. With the foreclosure facility, you can close your debt using this large amount. For this, you may be charged a foreclosure fee. Foreclosure can allow you to become debt-free prior to the end of your loan term.

It is possible that during the loan tenure, you gain access to a lump sum amount like a bonus. This lump sum might not be sufficient enough to foreclose your loan. However, you can still direct this money towards the repayment of your loan to close your account faster by making a part-prepayment. With a nominal fee, you can repay a portion of your loan, leading to a reduction in the EMI and the interest amount you are liable to pay. 

Here are the part-prepayment and foreclosure charges of some of the personal loan providers available on Bajaj Markets.

Disclaimer: These charges are subject to change as per lender’s discretion.

Here are some reasons why you should consider opting for a personal loan prepayment or foreclosure facility.

• Become Debt-Free Faster

When debts are not managed efficiently, the borrower is likely to experience financial hardships. Foreclosures are a simple and convenient way to close your ongoing debts prior to the end of your loan term. Similarly, part-prepayments can also help reduce the EMI amount and loan term, allowing you to become debt-free sooner than anticipated.

• Save on Interest

Prepaying your loans can help lower the aggregate interest charges as the principal amount reduces with each lump sum payment. Similarly, foreclosure allows you to save up a lot on interest, reducing the aggregate expense. However, these facilities come with a fee which should be taken into consideration. Calculate the cost and ensure that you do not end up paying more than you would've if you didn’t opt for these options. 

• Boost Your Credit Score

Foreclosure and pat-prepayment facilities allow you to lower your debt burden, which helps boost your credit score. Part-prepayments help reduce your EMIs, allowing you to make timely repayments without straining your finances. Meanwhile, foreclosures can reduce your debt-to-income ratio, which adds to your creditworthiness and can gradually increase your credit score. 

 

Through these facilities, manage your debt effectively to become debt-free sooner than expected.