Ever since the banks have simplified the conditions for giving loans, there has been a huge increase in the number of bank borrowers in our country. Now people take loan from the bank for their every small needs.
Banks give loans ranging from mobile to buying a house or car. Banks give loans to those people who have a good credit score. The loan is given for a fixed period. But, any person can get rid of the loan by repaying the bank’s money ahead of time. Premature loan repayment is called loan foreclosure. On doing this, banks charge Loan Foreclosure Charges. But, banks cannot recover this charge from every customer who repays the loan.
If a customer pays his loan ahead of time, then it causes loss to the bank. That’s why they charge for it. Foreclosure charges vary from bank to bank. Mostly the foreclosure charge remains up to 5% of the outstanding loan amount. Foreclosure charges are mentioned in the loan agreement. Therefore, before taking the loan, definitely look at the rate of foreclosure charge.
Who does not have to pay foreclosure charges
Whether you take a personal loan or an education, business, two-wheeler or car loan, all loans have the option of foreclosure. You can use this option only after depositing a few installments after the loan. According to the rules of the Reserve Bank of India, if you had taken a loan on floating interest and you repay the loan before time, then you do not have to pay foreclosure charges. Foreclosure charges are levied on premature closure of a loan taken on fixed interest.
There are many benefits,
the benefits of repaying the loan ahead of time are the only benefits. By doing this, less money has to be paid in the form of interest, along with this the credit score is also strong. Generally, banks allow personal loan foreclosure only after one year or 12 EMIs have been paid. If you have to pay foreclosure charges after repaying the loan, then do it by first ascertaining the amount involved.
