Unity Small Finance Bank Personal Loan Foreclosure

Unity Small Finance Bank (SFB) enables you to repay your personal loan before the scheduled tenure ends. Foreclosing your loan can help you save on interest payments and become debt-free faster. However, the bank may levy certain pre-closure charges. 

Check Unity SFB’s Personal Loan foreclosure charges and procedures in advance to avoid unexpected costs or penalties.

To successfully pre-close your personal loan with Unity Small Finance Bank, you need to meet the following requirements: 

• Completion of Lock-in Period: Pre-closure is allowed only after the minimum lock-in period as per the loan terms

• No Outstanding Dues: All EMIs, penalties, or pending charges need to be cleared before applying for the foreclosure process

• Formal Request Submission: You need to submit a written application or pre-closure request form to the bank.

Required documents include:

• Loan Account Details: Provide your loan account number and other relevant details

• Identity Proof: Submit a government-issued ID, such as an Aadhaar card, voter ID, or passport

• Address Proof: You can provide documents like a utility bill or a rental agreement

When you have surplus funds and wish to foreclose your personal loan with Unity SFB, you can follow the steps below:

1. Review the Loan Agreement: Understand the bank’s foreclosure policy, applicable charges, and required notice period

2. Request Foreclosure Statement: Contact the bank to obtain a detailed statement that shows the outstanding principal, interest, and any additional charges for the proposed closure date

3. Evaluate Finances: Ensure you have sufficient funds to cover foreclosure, as you may need to liquidate investments or other assets

4. Submit Foreclosure Request: Provide a written request along with required documents; co-applicants may be required to provide No Objection Certificates (NOCs)

5. Make Payment: Pay the foreclosure amount via online transfer, cheque, or draft, and obtain a transaction receipt as proof

6. Obtain No Dues Certificate: Follow up with the bank to receive the official document confirming loan closure

7. Verify Credit Report:  After a few months, check your credit report to ensure the loan is marked as ‘Closed’

Pre-closing a personal loan can be beneficial in certain situations, but it also has drawbacks. Here is a quick overview:

Advantages

• Save on Interest Costs: Pre-closing your personal loan helps you save a significant amount on the total interest due 

• Positive Impact on Credit History: Timely pre-closure reflects responsible borrowing behaviour that enhances your eligibility for future loans by boosting your creditworthiness

• Reduce Debt Burden: Becoming debt-free reduces financial stress, increases disposable income, and lowers the risk of getting trapped in a debt cycle

Disadvantages

• Pre-closure Fees: Some banks charge a penalty or pre-closure fee, which can reduce the benefits you gain from interest savings

• Impact on Credit History: Pre-closing may shorten your credit history, which may have a slight negative impact on your credit score in the short term

• Missed Tax Benefits: If the loan was taken for purposes like home renovation or higher education, it may result in losing tax benefits linked to interest payments

Before deciding to pre-close your personal loan, consider your financial situation and the implications of early repayment. Keep the following points in mind:

• Sufficient Funds 

Make sure you have enough surplus funds to cover the pre-closure amount without affecting your emergency savings or reducing liquidity.

• Check Pre-closure Charges

Compare the pre-closure charges against potential interest savings to decide if early repayment is financially beneficial.

• Impact on Other Financial Goals

Consider whether pre-closing aligns with your broader financial plans. If your surplus funds could generate higher returns elsewhere, continuing with EMIs may be a better option.

The information and suggestions provided by BFDL hereinabove is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial advice or endorsement of any sort. The information including interest rates or fees, loan amount and other charges with regard to any product, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks or NBFCs. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any application or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products.