Difference Between Part Payment And Foreclosure Of Loans

Difference Between Part Payment And Foreclosure Of Loans

A loan is generally popular as it helps to get over a temporary or an urgent need for cash. Loans are given by most banks in the country with some variations in charges. If any customer closes his loan ahead of time, he definitely has many benefits.

Part Payment:

Difference Between Part Payment And Foreclosure Of Loans

Part-payment of a loan happens once you have a payment amount of idle cash, however isn't such as the total principal outstanding loan amount. Part-payment works as a result of it brings down, the unpaid principal amount, that successively brings down your EMIs and also the total interest you pay. At any stage, closing the loan within the correct approach is very necessary as a result of it might have a bearing on your CIBIL Score.

It is necessary for reality in the mind of the procedures involved in properly closing the Loan. At any stage, if you face any problems or have an inquiry, the customer service of the Banks can help you to get through the same.

Foreclosure /Pre-Closure:

Difference Between Part Payment And Foreclosure Of Loans

Firstly, if the prepayment in full can be done relatively early into the tenure of the loan, a customer tends to save a lot on the interest. A loan generally has a lock-in of about one year after which the entire outstanding amount can be prepaid. If you are going to avail of any other loan such as Home Loan, etc., you must pay your personal loan so that your home loan eligibility would increase.

Procedure For Pre-Closing:

Difference Between Part Payment And Foreclosure Of Loans

Visits the bank wherever your Loan is active Carry the required documents like ID Proof, Bank statements mentioning the ultimate clearance of the last EMI, Cheque, or Demand Draft with that you may pay the whole balance amount. The lenders sometimes charge foreclosure charges on the outstanding amount which must be paid along with the principal outstanding amount.

Once the whole amount is paid either through a Cheque or Demand Draft, the Bank will give an acknowledgment letter that must be kept for future reference. Once all the steps are complete, the bank will send the NOC (No Objection Certificate) after a few days of pre-closing the Loan.

If your financial condition is good then it is prudent to pay the loan taken ahead of time because first of all it works your loan burden and at the same time helps you in improving your CIBIL score. And finally, this decision is completely yours.

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