How to pre-close your personal loan? A step-by-step guide for 2025

Pre-closing a personal loan with a prominent bank can result in long term savings on interest payments. Such a development hence can provide financial relief. Still, it is essential to clearly understand the process, associated charges, eligibility criteria along with other associated terms and conditions before proceeding.

Basic eligibility for pre-closure

Banks generally allow for a personal loan pre-closure only after the repayment of a minimum of 12 EMIs. If an applicant attempts to close the loan before this period, then such a request is not allowed and could also attract additional charges.

Now, for all individual cases you can discuss your problem with your respective bank and seek remedies as per the policies and rules of the financial institution in this regard.

Step-by-step guide to pre-close your personal loan

1. Visit the nearest branch: Pre-closure requests must be made in person at your respective financial institutions branch.
2. Submit required documents:
   
   
   • Loan account number and related documents (e.g., loan approval letter, account statement)
   • Valid photo ID proof (e.g., Aadhaar card, PAN card, passport)
   • Proof of payment for the last EMI
3. Fill out the pre-closure form: Obtain and complete the pre-closure form provided by the bank.
4. Pay outstanding amount: Settle the total outstanding loan amount, including any applicable pre-closure charges.
5. Collect acknowledgment: After payment, obtain a receipt and acknowledgment from the bank.
6. Receive closure documents: Within a few days, the bank will issue a No Objection Certificate (NOC) and a loan closure certificate.

What are the pre-closure charges?

Pre-closure charges generally vary by lender and EMI tenure. Typically, it is 4% if closed between 13–24 months, 3% for 25–36 months and free after 48 months. It is important to note that the charges discussed here are illustrative in nature and depend on several other factors such as loan amount, financial institution, total tenure of repayment etc.

(Note: The pre-closure charges discussed above are indicative only, for complete details on the same consider reaching out to your financial institution.)

These charges are subject to applicable taxes.

Basic post-closure considerations

• Obtain significant documents: Do make sure you receive the NOC and loan closure certificate from your bank. These are important for your credit health.
• Check credit report: Verify your credit report after a while to confirm that the loan is marked as closed.
• Retain records: Keep all associated documents with you for future reference.

Therefore, by following the above given step by step guidelines and considerations you can look to diligently pre-close your personal loan.

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