Owing to India’s rapid economic growth, the personal finance market witnessed a steady rise over the past few years. Easy accessibility, convenience, instant funding, collateral-free, versatility, etc. have contributed to its increasing demand significantly. Adding onto these are tools like the personal loan foreclosure calculator, which simplify the loan prepayment procedure further.

• Close to 10% growth is anticipated in the country’s personal loan sector during 2020 – 2025.
• According to a recent CRIF report, disbursement of loans below Rs.50,000 has increased by five times in the previous two fiscals.

Once availed, personal loan repayments happen throughout the predetermined tenure in small monthly instalments. These EMIs comprise both the outstanding principal and the payable interest in certain percentages. Borrowers can, however, choose to become debt-free much ahead by foreclosing the credit and manage loan repayment efficiently.

Foreclosure signifies paying off the outstanding principal in full at a single go before the tenure ends. While this feature allows borrowers to save on their interests, it may also attract a penalty from lenders. A thorough assessment is, therefore, crucial before undergoing the personal loan closing process and using a calculator.

Facts to know about loan foreclosure

• Personal loans usually come with a lock-in period of up to 1 year. You cannot make a prepayment or a foreclosure within this period.
• Some lenders may also incur foreclosure charges ranging from 3% to 6% of the outstanding principal amount. Check out all the fees and charges on personal loans. 
• Lending institutions may often waive off prepayment charges during seasonal offers. You can use this event to close your personal loan, prematurely.

Besides, one of the essential factors about foreclosure is how much you save. Check the total amount you ought to pay as the remaining EMIs and the payable amount for foreclosing the loan. As per amortisation schedule, prepaying makes sense if a major portion of the principal is outstanding. It reduces outflow towards the interest and closes the loan early into the tenure. This is where a Mortgage Loans foreclosure calculator comes to the fore.

Know your loan foreclosure calculator

A foreclosure calculator is a free-to-use online tool that helps compute necessary foreclosure details instantly. It eliminates manual calculations and calculates based on certain information, like tenure, rate of interest, loan amount, foreclosure month and no. of paid EMIs. As you provide all these details accurately, the personal loan calculator displays the foreclosing amount and interest savings easily.

1. Understand what foreclosure month represents

Note that foreclosure month is when you plan to repay the total principal prematurely.

For example, your existing personal loan spans over 60 months’ tenure. Repaying the entire outstanding credit after 3 years 4 months, makes this 40^th month your foreclosure month.

The convenient part is you can use an online loan preclosure calculator multiple times. Adjust your entries until you attain a convenient schedule for full prepayment or make a thorough financial assessment.

Prominent NBFCs like Bajaj Finserv bring a user-friendly personal loan foreclosure calculator to evaluate the impact of early repayment precisely. Additionally, there are various other calculators to help you with personal lending, irrespective of a fresh or an existing loan.

• Demand for personal loans among young borrowers increased to 41% in the last 2 fiscals.

Exclusively for existing customers, Bajaj Finserv comes with customised pre-approved offers that ease the loan availing process and saves more time. Pre-approved offers are available on personal loans, business loans and a host of other financial products. You can check your pre-approved offers online by submitting a few details only. 

Foreclosing a personal loan saves on the payable interest, enhances CIBIL score, impacts credit profile positively and brings down your debt burden. However, considering all factors like prepayment charges, amount, and tenure are crucial before initiating the closing process. Once you assess the cost-benefit using an online personal loan foreclosure calculator, proceed smoothly.