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Essentials to understand about personal loan foreclosure
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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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A growing number of people today opt for a personal loan in times of financial distress. If you have taken a personal loan, you may want to make your way out of debt as soon as possible. Even experts suggest that it is best to ease your financial burden as soon as you are in the capacity to do so. Fortunately, you do not have to wait to complete your personal loan at the end of the tenure. The bank lets you avail of the option of a loan foreclosure.
As the name suggests, a personal loan foreclosure is a process of paying your loan amount in full. It is made in a single payment with the clearance ahead of the due date. Typically, there is a lock-in period of your loan account. Only on completion of this lock-in can you pay the balance and settle your account.
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Read on to know important factors related to personal loan foreclosure:
Charges levied on a loan foreclosure
There are charges that you will incur when foreclosing your personal loan. Typically, the fees range anywhere from 3% to 7% of the principal amount that is yet to be fulfilled. For this reason, you must understand clearly whether the foreclosure brings value to you. Do the math and evaluate to ensure that the charges do not further dent your finances. If you do feel that paying off the loan is better despite the incurred charges, a foreclosure is indeed a great option.
Additional Read: Understanding the common fees and charges related to Personal Loan
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