If you are thinking to foreclosure your personal loan, there are certain factors you need to keep in mind. Yes, a foreclosure of a personal loan has its own pros and cons which a borrower should know. But before knowing about the advantages and disadvantages of foreclosing personal loans, it is important for you to know how to do foreclosing? Yes, the process one needs to follow to avail personal loan foreclosure. 


How to Do Foreclosing of Personal Loan?

In order to avail personal loan foreclosure, a borrower needs to contact his lender and submit a written request regarding the same. Do not forget to collect NOC,i.e. No Objection Certificate from your lender soon after closing your loan account. 

Advantages of Personal Loan Foreclosure

Savings: When you prepay your personal loan before its set tenure, it actually saves a lot of interest portion. Yes, the longer tenure you opt for your personal, the more interest you pay along with your EMIs.  Thus, personal loan prepayment helps in saving a lot and also reduces your loan burden.  

Freedom from Debt: The moment you prepay your personal loan before its said tenure, you are actually getting debt-free. That’s Right! Foreclosure brings a sense of relief and makes you debt free from financial responsibilities. 

Disadvantages of Personal Loan Foreclosure

Foreclosure Charges: While you opt for a personal loan foreclosure, there are certain charges such as foreclosure charges that a borrower needs to bear. Yes, a borrower needs to pay up to 5 % of the principal outstanding+GST to avail foreclosure.   

Impact on Cibil Score: The longer the credit history you have, the better it is for your cibil score. Well, which means on pre-closing your personal loan before its set period, your credit history period also reduces. And, this will create a drastic impact on your cibil score.