Personal loans are the most popular types of loans, because the total amount may be used for any reason. Another reason people choose personal loans is that they are available readily and are collateral-free. This means the applicant is not required to pledge any collateral to obtain such loans.
The terms and conditions on a personal loan are varying from lender to lender. The increasing trend of quickly getting online personal loans has rendered the lending market more competitive. Online personal loans will be accessed within 24-36 hours if you are creditworthy and complete the application in only one go. You also have the freedom to compare different lenders while obtaining a personal loan online and to choose the one that best suits your needs. Customers are now ruined for choice, as fintech firms deliver innovative loan products tailored to their needs.
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About Personal Loan:
You can obtain a personal loan for your personal requirement such as home renovation, wedding, medial treatment, vacation travel. A personal loan will be given to salaried peoples. Normally, personal loans processed very fast, and less documentation required. Before applying for a personal loan, make sure you understand how personal loans work.
Personal loans are considered as an unsecured loan. It means the bank won’t take any collateral to provide a personal loan. Since a personal loan is covered with any collateral, it’s a risk for banks. Due to this personal loans have higher interest rates and less Tenure.
Loan Amount: Although all banks follow their own guidelines. Usually, banks offer personal loans from 50,000 to 30,00,000. Again the loan amount depends on your income and company which you work for.
Loan Tenure: Personal loan repayment tenure typically ranges from 12 to 84 months. However, some banks restrict the tenure based on your working company.
Eligibility: The applicant has to be a minimum of 21 years of age and should be employed. The minimum salary desired by banks is 20,000 per month.
How To Close Your Personal Loan – Explained
Personal loans are generally short-term loans with tenures that last no longer than 60 months. When you opt for a personal loan online, you have the option to choose the tenure of your loan. With most lenders, too, the terms of prepayment are lenient.
Personal loans are mainly short-term loans with tenures that run no more than 60 months. If you apply for a personal loan digitally, you have the right to pick your own loan term. Many lenders are often lenient regarding the conditions of prepayment. Therefore you must read the terms and conditions of the closure very carefully before you sign the agreement.
Types of Personal Loan Closures
The terms of the closure of the loan are mentioned in your contract, as discussed above. Loan termination can be divided into the following categories, depending on the general criteria:
Pre-closure or Foreclosure:
This is when the borrower wants to repay the credit before the end of the tenure of the loan. The biggest benefit of pre-closing the loan is that you are saving money on the EMIs and on the principal interest you pay. Any lenders allow for foreclosure after 6-12 months after the loan sanction date. Unless you choose to repay the loan within the above time, you will be forced to carry some foreclosure charges stated in the agreement. Online lenders, generally offer more flexibility of pre-payment.
This is when the borrower makes the payment for the full tenure in installments as set out in the agreement. When the whole debt has been repaid, the closing comes towards the conclusion of the pre-decided term. There are no extra expenses involved or charges.
How to Close Your Personal Loan Early? Is foreclosure a Good Idea?
As discussed above, some penalties may be enforced upon pre-closure of the personal loans prior to the agreed tenure. So make it a point to carefully read the terms of the foreclosure before you decide to do so. Words differ from lender to lender. For offline loans to be closed, you must follow the following procedure:
- For all the documentation visit the bank. The required documents are your proof of identity, loan account number, a bank statement showing last cleared EMI, and the pending loan amount cheque or demand draft. These weren’t the final document list. They can vary from lender to lender. Before you make an appointment please check with your lender.
- Check with the bank for fees, or any fees that may apply to foreclosure. When you have the lender’s total number, you consider the whole balance paid.
- For future reference, the bank may send a letter of acknowledgment for the same. Even, if at the point of obtaining the loan you sent some documents, they will be taken back from the bank.
- Once the process is complete, the bank will send the certificate of the closure via e-mail or post.
For personal online loans, your online account created with the lender reflects the outstanding loan amount. Until you have charged the remaining balance in full, you should provide an acknowledgment of the same. Your lender will issue a NOC certificate or the loan closure agreement once the entire process is complete.
Procedure for Regular Closure of Personal Loan
- When the loan is charged in accordance with the agreed terms and conditions, no extra costs or provisions occur. Once your last EMI is paid you must follow the following steps for offline personal loans.
- Visit the keeping money with the reports, for example, personality verification, credit account number, and a check on the off chance that any sum is pending.
- Check with the office for any pending sums. Make the installment of the pending sum assuming any and complete the conclusion customs.
- When the advance record is shut, you have to take a No Objection Certificate (NOC) from the bank expressing that there are no pending levy on your credit account and that whole chief sum had been reimbursed.
- The bank will likewise give a conclusion authentication after the whole procedure by means of post or email.
You can use the payment details for online personal loans in your online account. When the whole balance is paid off the lender may close your loan account and grant a certificate of closing confirming that the debt has been paid off in full.
Things to do once your personal loan is repaid
All your transactions are recorded in your credit report including payment, late payment, and no payment. A credit score is created based on this report which represents your financial stability. Your credit score helps lenders assess your creditworthiness and decide on the terms to be set for the loan in certain cases.
When your personal loan is completely repaid, it is the lender ‘s responsibility to amend the information on CIBIL where the credit records and credit scores are stored.
To prevent any mistakes, you will verify with CIBIL if the details have been changed to your profile after you obtain your Certificate of Closure. If the closure does not reflect in your history, send the lender a written request asking them to update your credit report with CIBIL.
Whether you have taken a personal loan online or offline, it is very important that a proper procedure is followed to make sure that the loan closure process is complete as it has impact on your credit score.