Finding information about how to get a personal loan online is easier than discovering the pre-closure charges in India. Different banks levy different charges for offering the same service. Hence, there is no unique answer that seems to address all banks or lenders. However, when it comes to pre-closing a personal loan, the procedure is almost the same with all lenders.

Read on to understand the preclosure procedure, the typical charges, and why you should pre-close your personal loan.

How Can You Close the Personal Loan?

Broadly, there are three ways in which you can close a personal loan.

  1. Regular Closure
  2. Foreclosure or Preclosure
  3. Part-payment

Personal Loan Regular Closure

Regular closure is when you pay the EMI as per agreed terms with the bank. After you pay the final EMI, contact the bank to ask for a No-Objection Certificate or NOC. The bank may inquire about the loan account number, identity proof, and payment proof. Some banks, such as RBL Bank, issue the NOC automatically after the borrower makes the final EMI payment. The NOC makes you eligible to avail of new loans at attractive interest rates. Personal loan regular closure charges are nil.

Personal Loan Foreclosure or Preclosure

Foreclosure or pre closure refers to the situation when you repay the total outstanding dues before the end of the term. Generally, personal loan tenure ranges between one year and five years. When you choose a tenure of five years but want to close your loan by paying the outstanding dues before five years, it is known as foreclosure or pre closure.

Personal Loan Preclosure/Foreclosure Procedure and Charges

The personal loan preclosure procedure starts with contacting your bank and informing them about your decision to close the loan early. The bank will calculate the net interest loss and tell you about the charges. Generally, most Indian banks charge 3% of the outstanding principal as a foreclosure charge after twelve (months) of the loan approval date. For example, if your personal loan was approved on 1st April 2020 and you want to preclose it on 1st May 2021, the bank will charge 3% of the total outstanding principal amount as the prepayment charge.

However, personal loan preclosure charges are different for borrowers closing the loan before twelve (12) months. If you want to close your loan before twelve months, most banks will charge 5% of the outstanding principal amount.

It is also worth mentioning that Indian banks usually do not allow foreclosure before six months of loan approval.

Hence, if you want to avoid personal loan preclosure charges, it is better to calculate your repayment capability and select the right loan amount and tenure.

Personal Loan Part-Payment

Personal loan part-payment is when you want to pay a little extra than the EMI amount. Borrowers often make part-payment when they get a windfall gain or an appraisal. Paying a part of the outstanding principal early may allow you to reduce the interest rate, EMI, and financial liability. Unlike personal loan preclosure charges, personal loan part-payment charges depend on the amount you want to pay. The personal loan part-payment procedure is the same as the preclosure procedure. You have to contact the bank and inform them about your desire to make a part-payment. The bank will calculate the charges and tell you the amount.


Unlike many other loans, personal loan preclosure charges and the procedure are slightly more complex. On the one hand, personal loan preclosure makes you debt-free, and your financial liability reduces. However, on the flip side, it makes you shell out more as personal loan preclosure charges.

Hence, when you want to know how you can get a personal loan online, you should also factor in the preclosure charges before selecting the lender. Personal loan preclosure is one of the best ways to be debt-free. While ultra-low interest rates offered by a bank might seem too appealing, you must also look at the preclosure charges to make an accurate decision.

By admin

Writing and blogging is my passion. Providing meaningful information to readers is my object.