In this article you will get complete information about how you can foreclose your personal or home loan before time and what is the advantages and disadvantages of pay early.
When someone needs to raise more funds at once, people often take a loan from the bank. But later its EMI has to be paid for a long time, along with which hefty interest is also charged from you. If the tenure of your loan is not over yet and you have enough money to repay it, then you can repay it even before the stipulated period i.e. fore-closing the loan.
How to Foreclose Loan Before Time
However, you have to keep a few things in mind while foreclosing the loan. It has some advantages and there can be some disadvantages as well. Today we are going to tell you whether foreclosing the loan will be beneficial or harmful for you.
Advantages
When you pay ahead of time, it saves you the interest on the loan. If you have taken more than one loan, then you can first repay the loan whose interest rate is higher. In this way, you can repay personal loan, car or bike loan, credit card EMI, etc. one by one. At the same time, you also have the option of transferring the loan. You can transfer your loan from a bank with a higher interest rate to a bank with a lower interest rate.
Disadvantages
Many banks charge customers for repaying the loan ahead of time. If you are thinking of getting fore-closing of any of your loans, then first you should inquire about it in the bank. Many banks charge 1 to 5 percent of the remaining loan amount. This is done so that they can be compensated for the loss on interest. By calculating both the fore-closing charge and the interest on the remaining EMI, you can decide whether to repay the loan or not.
Things to Remember
After fore-closing the loan, you must take its NOC certificate. This certificate is proof that you have repaid the loan. Apart from this, NEC i.e. non-encumbrance certificate has to be obtained for the transaction details of all matters related to home loan or property. At the same time, after paying the loan, you also have to ensure that your CIBIL score is updated on time. Because it normally takes a long time to process, which can have an impact on your CIBIL score. So friends, hope you like this article and get your all answers about foreclosing loan procedure. Please share with your friends and relatives too.