A personal loan is of great assistance in case of any urgent financial requirement. It is an unsecured financial instrument with a high-interest rate, in comparison to a secured loan. Is it is available at a high rate of interest, paying it back for a longer tenure can cost you a great deal? If you have taken an instant personal loan, you should work towards repaying it and closing the loan in the shortest time duration, else it would just add to your financial burden. Prepayment and closure of the Personal loan help you to save more in your monthly budget. You can even start investing and gain returns.
The most essential item to close a personal loan is your Personal loan account number, which can be easily attained from the loan account statement.
Proof of your identity is a prerequisite to close a personal loan. For this, you can use your PAN card, Aadhaar card, Voter Id card or any other government-issued identity document to show it as an identity proof.
Other loan-related documents include a loan approval letter, loan account statement and other documents issued by the lender.
One can either repay the loan regularly till the completion of the entire tenure, or one can prepay the loan to reduce the debt burden.
No fee is imposed when you choose for regular closure of a personal loan. You have to only pay the installments.
A loan is said to be pre-closed when you repay the loan before the loan tenure ends or when you repay the loan in a shorter time period than mentioned on the loan agreement. A pre-closure of a personal loan can save a large number of interest costs if done at the right time. Often banks have different lock-in periods, prior to which you cannot close the loan. Furthermore, banks also impose charges for the pre-closure of a personal loan known as pre-closure charges.
Every bank has its own policies on pre-closure, some allow pre-closure on paying a charge and others don’t approve of pre closures.
Additional documents required in case of pre-closure
Your personal loan account will close once the money is received by the bank. The bank will then dispatch the loan closing papers to you.