Pre-closure of a personal loan is possible if you’re in the early stages of your loan repayment tenure. I took a personal loan years ago for a medical emergency, and I wanted to close it sooner than the tenure. I didn’t know if it was even possible so I researched a bit and asked a few family members, can I close personal loan before 1 year? My cousin, who’s a bank employee, explained the process of preclosure to me.
Can We Close Personal Loan Before 1 Year?
My cousin told me that preclosure usually saves a good amount of EMIs and interest rates. However, you should check the prepayment charges and read all terms and conditions of the bank to avoid any confusion. He also told me that there are two types of prepayment and whether you can or cannot preclose the loan before a year is usually mentioned in the loan agreement.
Full Prepayment: I learned that usually personal loans have a lock-in period of 6-12 months before which you cannot preclose. So, he advised me to check the agreement once.
Partial Prepayment: In this case, you’re supposed to pay more than your monthly EMIs. This eventually reduces your outstanding balance and interest rates.
He also told me that the right time to preclose a loan may depend on specific circumstances.
If you have an excellent credit history, you can preclose your loan without much trouble and it can also indicate your commitment to repaying loan on time, which can improve your eligibility score for future personal loans.
If you want to preclose your loan before 1 year, confirm once with your bank and check your loan agreement. If it’s positive, you should create a cost-benefit analysis as well, to find out if the preclosure will benefit you in the long run.
I hope this gives you some idea.
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Authors Of The Question
Can I Close Personal Loan Before 1 Year?
Arunima
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1 Answers
7 days
2025-01-30T11:34:45+00:00 2025-01-30T11:34:45+00:00Comment
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