All About Personal Loan Closure and its Types

Synopsis: 

• Closing a Personal Loan is important to maintain financial stability and improve your credit score. 

• Whether through regular closure, pre-closure, or part-payment, ensuring a proper procedural closure prevents outstanding liabilities and secures financial freedom. 

• HDFC Bank offers seamless and hassle-free Personal Loan closure options. 

At some point in time, you realised you need to either pay off your pending bills or debt, or need immediate cash to sponsor marriage preparations, purchase the latest gadgets or even go on a quick vacation. What do you do? You apply for a Personal Loan.

A Personal Loan, as compared to others, offers more flexible options in terms of its usage. Even more, it comes with a variety of different loan benefits, namely right from its quick loan disbursal, interest rates, flexible EMIs, convenient repayment tenure. HDFC Bank for example, offers Personal Loan EMIs at Rs. 2149 per lac. Moreover, HDFC Bank customers can get their loan credited in their account in 10 seconds and non – HDFC Bank customers within 4 hours.

No doubt, a Personal Loan will satisfy any financial requirement you have. But as you come closer to your last EMI repayment, you may have a plan of action for your future finances.

You may want to save your finances, invest in other beneficial options, or even opt for other loan options.

But before you go ahead with your financial plan, the first thing you need to do is close your Personal Loan 

and understand the different ways to close a Personal Loan.  

Types of Personal Loan Closures 

1. Regular Loan Closure 

This happens when the borrower diligently pays all EMIs as per the Loan schedule. Once the final EMI is paid, the borrower needs to inform the lender to obtain a No Objection Certificate (NOC) and a Loan closure certificate, officially marking the end of the Loan. 

2. Pre-closure of a Personal Loan 

If a borrower decides to pay off the Loan before the agreed tenure, it’s called a pre-closure. Typically, this option becomes available after completing a minimum of 12 EMIs. To foreclose the Loan, the borrower must clear the current month's EMI, any pending dues, and the applicable foreclosure charges. 

3. Part-Payment of a Personal Loan 

For those looking to ease their monthly EMI burden or shorten the Loan tenure, part-payment is a great option. This involves making a lump sum payment towards the outstanding Loan, subject to the lender’s terms and conditions. 

Reasons to Close Your Personal Loan 

Closing a loan, just doesn’t mean finishing off with your loan payments. You need to ensure a proper procedural closer.

But why do you need to a close your loan? Here are some of the reasons:

• No outstanding debts against your name
• Reduced EMI values against your name in case of current additional loan or investment options
• Allows for better future investment or loan opportunities with same lender.
• Improved Credit Score

To ensure that you close your Personal Loan application appropriately, here is what you need to do:

Know what you need

• Personal Loan account number: This is usually found on the loan account statement. Or you can check it by using the online banking facility or even through your NetBanking account if available.
• Identity proof: Carry your passport, PAN card, Aadhar card or other government-issued identity document.
• Other loan-related documents: This includes loan approval letter, loan account statement and other documents issued by the bank.

Additional documents in case of pre-closure

• Pre-closure quote: Visit the loan officer to check the loan amount balance and any pre-closure charges or penalties. Once you have the exact amount, you can pay the bank to close your loan.

• Cheque or demand draft for pre-closure: Prepare a cheque or demand draft in favour of your bank to cover the outstanding amount. Avoid paying the pre-closure amount in cash.

What to do:

• Visit bank with the complete set of documents (as mentioned above).
• You may be required to fill a form or write a letter requesting pre-closure of the Personal Loan account.
• Pay the pre-closure amount.
• Sign the required documents, if any.
• Take acknowledgement of the balance amount you have paid.
• Since a Personal Loan is generally unsecured, there is no asset that needs to be released from lien or hypothecation.
• Your Personal Loan will close automatically once the applicable funds are received by the bank.
• The bank will dispatch a loan closing document that you need to keep safely.

Closing a Personal Loan is as easy as applying for one. Once you are done with your Personal Loan closure, you are free to pursue your other investment and loan options whenever you want!

Get the Personal Loan to match your needs and enjoy a stress free financial assistance now!

Can I repay the personal loan earlier?

Yes, you can repay your loan fully any time post the cooling period, premature payment (partly) is allowed post payment of first EMI click here to know more.

To raise a service request regarding Personal Loan premature closure, one can raise an online token for the same. Click here to raise one

* Terms & conditions apply. Personal Loan disbursal at sole discretion of HDFC Bank Ltd. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.